The 7.1 per cent indexation rate for HECS-HELP is an added stressor for many university students and graduates following recent record inflation and cost-of-living pressures. OTR journalist Robert Hicks asks experts and political parties how this indexation will affect students, and what they are planning to do — or not do. (Image: Tero Vesalainen)
By Robert Hicks | @_roberthicks
With no changes to HECS-HELP in the 2023-24 Budget, indexation looms over students and graduates alike. But what does this indexation mean? How does it work? Will it cause students to feel increased cost-of-living pressures?
HECS-HELP was established in 1989 by the Hawke Federal Government, replacing previously free tertiary education implemented by the Whitlam Federal Government in 1971. Per Statista, since the scheme’s implementation it has facilitated a rise in the number of Australian university graduates aged 15 to 74 from 7.9 per cent in 1989 to 50.8 per cent in 2022.
HECS-HELP debt is indexed in line with the Consumer Price Index (CPI), one of the main markers of inflation, to maintain its real value in line with inflation and cost of living.
This year inflation has ballooned, heavily impacting the indexation rate. For comparison, past indexation rates since 2013 are listed below per the Australian Taxation Office (ATO).
| Year | Indexation rate |
| 2023 | 7.1% |
| 2022 | 3.9% |
| 2021 | 0.6% |
| 2020 | 1.8% |
| 2019 | 1.8% |
| 2018 | 1.9% |
| 2017 | 1.5% |
| 2016 | 1.5% |
| 2015 | 2.1% |
| 2014 | 2.6% |
| 2013 | 2.0% |
Federal Education Minister Jason Clare said HECS-HELP has not been altered in the 2023-24 Budget, but several other monetary measures mitigating cost-of-living pressures for students have been raised.
“To assist with cost-of-living pressures, the May budget lifts the rate of JobSeeker, Youth Allowance, Austudy, and ABSTUDY by $40 per fortnight. Commonwealth rent assistance is also being boosted,” Mr Clare said.
In addition, Mr Clare has established the Australian Universities Accord — a review led and developed by ministers, businesspeople, public policy analysts, and former academics — which he calls, “the biggest review of higher education in 15 years”.
“It will look at everything, including affordability and access to higher education,” he said.
“Professor O’Kane will hand a final report to the Government at the end of this year.”
Chief Executive of Universities Australia Catriona Jackson, in an ABC Radio Brisbane interview, said they are halfway through the accord process but are unsure whether or not the accord’s interim report will factor into the recent budget considerations.
“We’re right in the middle of the biggest opportunity for universities to have a say in their future in decades — a big thing called the Accord process — a great big review,” Ms Jackson said.
“We’re about halfway through it at the moment, so whether this feeds into budget considerations for this budget or not, we’re not sure.”
Additionally, Ms Jackson said that while student debt is increasing and it will take longer to pay, it does not place additional cost-of-living pressure on students or graduates.
“We understand that students are under, like many other members of the community, incredible cost-of-living pressure right now,” she said.
“It’s really important to understand though, that though June 1 is a real date, your repayments on a weekly basis will not go up by 7.1 per cent.
“Your repayment period gets longer, but you aren’t paying more now. It doesn’t actually impose additional cost-of-living pressure on you right now.”
Federal Shadow Minister for Education Sarah Henderson said the recent budget presented a challenge for the Labor Government to “do anything other than conduct a myriad of education reviews and deliver a financially crippling HECS-HELP debt indexation rate of 7.1 per cent”.
In a recent press release, Ms Henderson noted that students with a $90,000 HECS debt on an annual income of $74,000, the average starting salary for graduates, will be hit with a $6300 increase in student debt this year.
Ms Henderson blamed Labor’s handling of inflation as the root cause of the highest indexation rate in 30 years.
“With some 3 million Australians carrying a student loan, what is the Albanese Government doing to combat the cost-of-living crisis faced by so many students and graduates? Mr Clare needs to do more than put his head in the sand,” Ms Henderson said.
“Skyrocketing student debt is a direct result of Labor’s failure to combat sky high inflation.
“While Mr Clare is caught up in a vortex of reviews, what is Labor doing about declining school standards despite record school funding, the crisis in the teaching profession, a school curriculum which is not delivering for students, and skyrocketing student debt?”
Australian Greens Deputy Leader and Education spokesperson Mehreen Faruqi said that soaring student debt is a blow to those already experiencing hardship due to wage stagnation and will cause greater cost-of-living pressures on students.
“It’s particularly bad because it comes with the double whammy of real wages stagnating,” Ms Faruqi said.
“With the minimum repayment income sitting at around $48,000, barely above the minimum wage, desperately needed money is being taken out from people’s payslips to pay off their student debt.
“This is money they need for rent, to put food on the table, or to buy medicine. It is obscene that in a wealthy country like Australia, so many people are having to make these choices every day.
“Student debt is exacerbating inequality as it disproportionately impacts women, young people and those on lower incomes.”
Ms Faruqi said the Greens will keep fighting for free education and the wiping of student debt.
“An urgent problem facing 3.2 million Australians right now is the student debt spiral they are caught in. On June 1 this is going to get even worse when an indexation of 7.1 per cent kicks in, adding thousands of dollars to existing debts,” she said.
“This unfairness can be removed today, on the way to fixing the whole broken system. My bill to abolish indexation on student debt and raise the minimum repayment threshold to median wage is in the Senate. All Labor needs to do is join the Greens in providing this much-needed financial relief to so many, including young people, women and those on low incomes who are really feeling the burden right now.
“The campaign to scrap indexation will go on. We will make this an election issue if Labor refuses to act.
“Students and graduates will make it an election issue if Labor refuses to act.”
ontherecordunisa.com 