The average student loan will increase by more than $1,200 this year amid calls for the federal government to fix what critics say is a “broken system”.
Higher Education Loan Program Debt (HELP) debts, such as HECS-HELP, increase each year under indexation. This is calculated after the publication of the March quarter inflation data, which was released on Wednesday.
Australian Taxation Office has not officially confirmed what this year’s indexation figure will be, but crossbench MPs say it will come in at 4.8 per cent if the formula used in previous years is followed.
It would be the second-highest indexation increase in a decade, behind a rise of 7.1 per cent in 2023.
A 4.8 per cent increase would add $1,272 to the average HELP debt of $26,494.
Someone with an outstanding HELP debt of $50,000 would face a $2,400 increase, while a $70,000 debt would rise by $3,360.
A $100,000 debt would increase by $4,800.
The Universities Accord final report made several recommendations to reform the HELP system, including applying indexation after compulsory repayments have been accounted for, and setting the indexation to either the Consumer Price Index or Wage Price Index — whichever is lower.
At the time of the report’s release in February, Education Minister Jason Clare did not immediately accept any of its recommendations but said the federal government would consider all of them.
Clare has, however, previously said there , describing the current method as “not right”.
Greens deputy leader and education spokesperson Mehreen Faruqi called for the government to urgently make “meaningful and substantial changes” to the system.
“Student debt is already locking people out of the housing market, crushing dreams of further study and stopping people from starting a family, and things are only getting worse,” she said in a statement on Wednesday.
“Anything less than scrapping indexation in the May budget is a betrayal to students.”
Greens deputy leader and education spokesperson Mehreen Faruqi has called for the federal government to scrap student loan indexation. Source: AAP / Lukas Coch
Faruqi said it was “obscene” that the federal government was .
“Labor’s escalating student debt crisis is not just an abrogation of responsibility, but a gross injustice which is robbing people of their futures and deterring people from pursuing higher education,” she said.
“A system that traps people into a lifetime of student debt is a broken system and needs to go.”
Victorian independent MP Monique Ryan is also .
She described the current system as “untenable”, with some people’s student debts rising faster than they could make repayments.
“Hundreds of thousands of Australians with a HECS debt are either treading water or seeing their HECS debts increase despite working hard to pay them off,” she said in a statement on Wednesday.
Ryan urged the federal government to make “concrete changes” to the system before 1 June.
“Australians are enduring a housing crisis and a cost of living crisis,” she said. “They deserve relief from their HECS debt crisis.”
Tyler Mitchell
As a former student loan borrower, I am deeply concerned about this significant increase. The government must address this issue promptly and fix the broken system that burdens students with even more debt. It’s time for real change.
As an Australian student loan borrower myself, I am deeply concerned about the proposed increase of over $1,200. It’s disheartening to see the continuous rise in HELP debts, making it even more challenging for graduates to repay their loans. The government must address this issue and strive towards creating a fairer system for students.