By June 1 of next year, the Federal Government will reduce student loans, or HECS-HELP debt, by 20%.
The Federal Minister for Education and Member for Blaxland, the Hon. Jason Clare, remarked on the significance of this reform for Australians.
“This is a game-changer for the more than three million Australians with a student loan.
By 1 June next year, we will wipe around a further $16 billion from all Australians with a student dent, including Australians who went to uni and vocational education.
“This builds on our changes to make indexation fairer and all up this means we are wiping close to $20 billion in student debt,” Jason Clare said.
This change signals that education is a major focus for all parties ahead of the next election.
Assmaa Salabi ElDirani, a current student at Western Sydney University, expressed her relief over the debt reduction measures introduced citing loan repayments as a major stress factor for students. Despite not yet entering the workforce, it remains a concern for those still at university who worry about their ability to repay the loan within a reasonable time.
“Although my time in university has been an exciting journey so far, the burden of my student debt follows me everywhere.
This change means real relief, both financially and mentally. This is not just a reduction in numbers; it is hope that one day I’ll finally be able to save for a home for my family,” Assmaa Salabi ElDirani said.
While the Coalition also supported the passing of the University Accord (Student Support) Bill 2024, the Shadow Minister for Education and Senator for Victoria, the Hon. Sarah Henderson, questioned how many current students would see a real cost saving. She claimed that only a proportion of the 3 million students mentioned by the Labor government would receive a refund.
“Labor’s change to HELP indexation means three million Australians will be hit with an 11.1 per cent increase in their student debt. Only seven per cent of students will receive an actual refund,” Sarah Henderson said.
The Australian Taxation Office (ATO) is responsible for applying indexation to HELP debts, which is applied on 1 June each year.
Legislation passed in November 2024 has capped the indexation rate to the lower of the Consumer Price Index (CPI) or the Wage Price Index (WPI).
If Australians had indexation applied to their HELP debt in 2023 and 2024, the Australian Taxation Office (ATO) will recalculate their HELP debt and issue an indexation credit. This reduced rate will take effect immediately for those eligible. Credits can be checked through the ATO.[1]
Regardless of the size of the debt reduction, students like Assmaa are grateful for the cost savings.
“Given the way prices have been increasing, particularly in housing and family planning, an initiative like this feels almost necessary, especially for younger individuals.
“Moving forward, this reduction will hopefully make the education system fairer and more affordable—a place that people want to be a part of, rather than one they fear due to the debt that awaits them,” Assmaa Salabi ElDirani shared.
[1] The Australian Taxation Office. (2024, 27 November). Loan repayments and indexation. The Australian Taxation Office, Study Assist, https://www.studyassist.gov.au/managing-and-repaying-your-loan/loan-increases-and-indexation.
