The Federal Government is today introducing its long-awaited changes to HECS debt indexation in Parliament.
The Government first announced it was changing how HECS is calculated in May.
These measures – expected to wipe more than $3 billion in student debt – are being tabled in Parliament today, along with a raft of other higher education reforms.
While the Government has a majority in the House of Representatives, the bill will need the support of the Coalition or the Greens and crossbench to pass the Senate.
What is HECS indexation?
Indexation is the annual increase in HECs debt to reflect rising prices. Currently, HECS debts are indexed to inflation.
In a period of high inflation, debts increased by 7.1% in June 2023 — the highest since 1990.
This year, they rose by 4.7% in line with inflation.
However, in May, the Government announced its plan to change how student debts are indexed.
How is HECS changing?
If passed, the Government’s bill means HECS indexation will be based on either the Consumer Price Index (the rate of inflation) or the Wage Price Index (the figure measuring rising wages) — whichever is lower.
This will be backdated to last year, meaning last year’s WPI of 3.2% will be applied to debts, instead of the CPI of 7.1%.
TDA also confirmed anyone who had paid off their student debt in 2023 would get a cash refund.
Legislation
The Government is now introducing a bill to make these changes – three months after it was first announced.
The bill also includes other policies like placement payments for nursing, teaching, midwifery and social work, and free uni prep courses.
“Once legislation passes, it will wipe out about $3 billion of HELP debt for more than 3 million Australians,” Education Minister Jason Clare told TDA.
The bill is expected to pass before the end of the year.
Response
When the Government announced its HECS reforms earlier this year, Shadow Education Minister Sarah Henderson called the plan “trickery and deceit”.
Shadow Treasurer Angus Taylor said: “The best way to address growing HECS debts is to fight Labor’s homegrown inflation at its source by reining in spending and strong budget management.”
Independent Senator David Pocock said the announcement was a good first step. But he said without “proper reform, student debt will continue to skyrocket”.
