Media Releases

Zali Steggall Statement: Welcome changes to paying off student debt, but more to do

5 May 2023

I welcome today’s announcement that the government will be making changes to the HECS and HELP system that will make it easier to pay off student debts.

In line with calls from the crossbench, and key recommendations outlined in the University Accord, the HECS debt indexation rate will now be linked to the lower rate of either the Consumer Price Index (CPI) or the Wage Price Index.

I’m pleased to see the policy will be back dated to June 1, 2023, and students debts will be credited following last year’s 7.1 per cent indexation.

We must do all we can to ensure younger generations, and those looking to retrain and upskill can confidently do it without being burdened by unreasonable amounts of debt.

While a significant win, there remains the important issue of the timing of indexation.

Debts are indexed on 1 June of each year. Whilst repayments are automatically deducted by the Australian Tax Office through the PAYG system during the course of the financial year once a person’s income reaches the threshold and held by the ATO, the repayments are not applied to reduce the balance of the student debt until lodgement of income tax returns, after 1 July. The repayments are not applied to reduce the debt prior to the debt being indexed. This needs to change.

Either repayments withheld by the ATO are applied in real time to decrease the debt balance prior to indexation or the indexation date should be moved to 1 October of each year or a date after the end of the financial year.