As of June 1, the indexation (cost of living) will be added to the student Higher Education Loan Program (HELP) debt, hitting 7.1 per cent, the highest rise in more than 30 years.

Source: ATO

During the 2020-2021 financial year, there were 2.9 million people with outstanding HELP debt, according to a Federal  Parliamentary report.

With recommendations supporting voluntary repayments before the June 1 increase, there has been an almost 60 per cent increase in payments by the end of March, compared to the previous year, according to Australian Tax Office (ATO).

Digital and Social Media student, Amelia Morrison was concerned about student debt before even starting tertiary studies.

“My HECS debt has always been a concern for me. It started when I first started university, I am the first person in my family to go to uni and between my parents and I, we did not understand how HECS worked,” Ms Morrison said.

“I know that overtime I will be able to pay off my HECS debt but now that it’s rising it scares me. $1,259.82 was added to my debt after the indexation was applied, I barely make enough to afford rent most weeks, I can’t even see a future where paying off my HECS will be thinkable.

“It also concerns my future, buying a house, having children, thinking of expensive costs.

“I don’t know when in the future I will find financial stability where I can start paying off larger sums of my HECS to avoid any more increases to my HECS debt.”

HECS-HELP is an Australian Government loan program assisting people to gain access to higher education. Although the loans are interest free, the debt is indexed annually by the Consumer Price Index (CPI).

The CPI is connected to the financial markets, so with a peak in interest rate, inflation and cost of living, the indexation has risen and the interest free debt has increased.

Many students are having to work either part time or full-time, whilst also studying, to help support themselves.


Last year 37 per cent of students studying a certificate, diploma or degree were working full-time, according to the ABS.

Visual Communication Design student, Charlie Hill has expressed concerns for work opportunities within her chosen field.

“As a graphic design and Communication and Media student I’m worried about my future job security anyway, particularly with the introduction of AI,” Ms Hill said.

“There is already not a very high base salary and I worry that I won’t be able to pay off HECS or that it will be a constant debt throughout my life.

“I was worried going into uni about the HECS and my parents shared this worry. They were honestly quite hesitant about me doing the degree because of the potential lack of job opportunity and overwhelming HECS debt.

“With this debt now increasing and me being halfway through my degree it’s hard because I have no out, now either way I will have to pay a lot of money with or without finishing the degree.”

Futurity Investment Group, an independent financial institution, has conducted a survey consisting of more than 1,000 Australians with HELP debt.

The survey released on March 6 found the debt can impact major life events.

Futurity Investment Group recently stated that the average time to fully repay the debt is now 9.5 years and has gradually trended up from 7.5 years over the past 15 years.

The average amount of HELP debt still outstanding has increased from $15,191 per person in 2013 to $23,685 in 2021. With the increase hitting on June 1, there will be an expected average increase of a further $1,760.

Financial stress is already a reality for students, with life goals, such as buying a house out of reach for many students and graduates.

“It’s put students in a position where we will be in debt for a long time, much more than we anticipated when choosing our degrees,” Ms Hill said. “This combined with many economic factors, including the housing crisis, makes the future a stressful thought rather than an exciting opportunity, and that is clearly dictated by money and debt.”

Currently, there are automatic mandatory repayments that may be taken of an individual’s income with employers using the withholding system when using the Pay As You Go (PAYG) tax arrangement.

Compulsory repayments are currently calculated on an individual’s income and not the size of their debt.

This type of repayment is calculated as a percentage of income. Starting at one percent from $48,361, to a maximum of 10 per cent at $141,484 and above.

Source: ATO

A student earning under the minimum repayment bracket, will not be expected to make a repayment.

However, the debt will still sit there as a reminder of the obligation to repay.

Additional voluntary repayments are accepted, regardless of income bracket.

For those students struggling with the compulsory repayments, the ATO is currently accepting applications to defer repayments.