The Federal Government’s annual budget has outlined Labor’s plan to cut more than $3 billion worth of Higher Education Loan Program (HELP) debt and restructure the way student support loans are indexed.
Sourced: ATO, 2024 Budget, StudyAssist
The proposed change would cap the yearly HELP indexation at the lower rate of either the Consumer Price Index (CPI) or Wage Price Index (WPI), retroactively lowering the index rate from last year and this year.
If legislation is passed, 2023’s index rate spike of 7.1 per cent will be reduced to 3.1 per cent and this year’s 4.7 per cent will become 4 per cent.
Prime Minister Anthony Albanese said in an opinion piece for News.com.au that these reforms would make HECS fairer.
“This is real cost of living relief that will make a real difference to people,” the Prime Minister said.
“We’re proud to be backing the hard work and aspiration of Australians looking to better themselves by studying at university or TAFE.”
Shadow Minister for Education Sarah Henderson said in a media release that Labor hasn’t acted with urgency.
“[Education Minister] Jason Clare has been sitting on the recommended changes to HELP indexation since last December.”
The proposed changes are based on one of 47 recommendations included in the final report from the Australian Universities Accord, which was delivered to the education minister in December and released publicly in February.
The Australian Universities Accord was a 12-month review of Australia’s higher education system which had the goal of creating recommendations and performance targets that improve the quality, accessibility, affordability, and sustainability of higher education as well as the long-term security and prosperity of the sector.
Independent MP Dr Monique Ryan created an online petition in March that urged the Government to change how HECS debts are indexed.
University student Luca Thompson is completing his master’s degree and is one of more than 288,000 signatories of Dr Ryan’s petition. He said the proposed changes are a good first step.
“I am very concerned about the amount of debt I’m going to accrue and how this will affect my borrowing power in the future for a home,” he said.
“Tertiary education should be free and accessible, or at least more affordable, to anyone regardless of their socioeconomic status.”
In the budget, the Government said that switching to the lower rate between CPI and WPI will fix a flaw in our student loan system and ensure that growth in debt won’t outpace wages again.
Higher education policy expert Andrew Norton from the Australian National University argued in a blog post that the Government’s overhaul looks like a better political solution in theory than in action, suggesting that once legislation is passed WPI rates will be above CPI rates again.
By backdating the changes anyone with debt indexed at the higher CPI-based rate in 2023 will receive a credit that reduces their outstanding loan by, on average, $1,200.
A HELP debt credit estimator is available on the Department of Education website.