The Federal Labor Government has announced plans to take 20% off all student debts.
It also plans to increase the minimum salary an individual needs to earn before they start making repayments to their loan.
It’s part of a suite of proposed reforms to the student debt system that the Government says it will introduce if it is elected for a second term.
HECS debts
When you begin a university course, you can either pay upfront or apply for a Higher Education Contribution Scheme loan (HECS) under the Higher Education Loan Program (HELP). Most students apply for this loan.
The system, rolled out in 1989, requires students to make payments on their loan depending on their income. From 1974 to 1989, students didn’t pay for their degrees.
The repayment threshold is currently $54,435. This means if you earn above that amount on a yearly basis, you will start paying off your debt.
Changes
In a speech on Sunday, Prime Minister Anthony Albanese will announce the Government’s plan to take 20% off all student debts. The proposal covers government loans taken out for uni, TAFE, and apprenticeships.
A $30,000 HECS debt would be reduced to $24,000.
The Government also plans to increase the minimum repayment threshold from $51,500 to $67,000 in the 2025/26 financial year.
It also wants to decrease the amount you must pay each year towards your HECS debt for anyone earning less than $180,000.
The Government says its plans will mean the average debt holder would pay about $680 less each year in repayments.
It wants to introduce a bill outlining these changes next year. The next Federal Election is due to occur by May next year.
Indexation
The changes announced follow an earlier Government bill aimed at changing how student loans are ‘indexed’.
Student loans increase every year because the value of money changes over time.
If the bill passes, 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.
