The Albanese government is expected to change the rate and timing of HECS indexation in the federal budget as people grappling with massive student debt brace for another large rise in June.
Prime Minister Anthony Albanese said on Thursday that a government announcement was imminent on a recommended overhaul of HECS as calls spread along the crossbench for Labor to look at wiping student debt.
Prime Minister Anthony Albanese flagged potential HECS changes.Credit: Dion Georgopoulos
“I think there’s a range of areas where we need to do much better with the younger generation, basically, and HECs is one of them,” Albanese told central Queensland radio station HIT.
“What we’ve done is we’re developing a Universities Accord, essentially with all of the universities across the board. And what that has said is that the system can be made simpler and be made fairer.”
The Universities Accord released its final report in February, calling for the government to make numerous changes to how student debt is calculated and when it is deducted. The expert panel, chaired by scientist and consultant Mary O’Kane, recommended fixing the rate of indexation to the lowest of either the wage price index or the consumer price index.
The current indexation rate is calculated by a formula that relies on CPI but is not in line with annual inflation figures. Last year loans rose by 7.1 per cent, increasing the average student loan of $24,770 by $1,759 in the thick of a cost-of-living crisis.
The report also called on the government to change the date of indexation from June 1, so the amount deducted from workers’ pay packets throughout the financial year would be taken into account by the Tax Office when recalculating debts.
Albanese said the government was examining the recommendations before an announcement, adding he wanted more people to go to university.
“We, of course, have a budget coming up,” he said.
However, the changes would have to be legislated, meaning it is uncertain relief would flow to students and graduates before June, which an analysis conducted by the Parliamentary Library for the Greens showed would increase debts by between 4.2 and 4.8 per cent, raising the amount of an average loan of $26,494 by up to $1272.
Greens deputy leader and education spokesperson Mehreen Faruqi, who has previously called for student debt to be wiped, is now calling for indexation on student debt to be scrapped.
“Just talking about the cost-of-living crisis while ignoring the heavy burden of student debt is not going to ease the pain for anyone,” she said. “Student debt can’t be fixed because student debt shouldn’t exist. But at the very least, it shouldn’t be increasing at such a ridiculous rate.”
North Sydney independent MP Kylea Tink said she had asked Education Minister Jason Clare about wiping student debts, adding such a scenario did not have to be limited to relieving current or former students in financial distress.
“Those discussions are ones we need to be having as a parliament,” Tink said, adding people training for crucial, highly skilled professions were undertaking years of study. “The bottom line is, it is not acceptable that we have young Australians carrying burdens with a six-digit figure.”
Kooyong independent Dr Monique Ryan said she had collected 260,000 signatures in a petition to make HECS debts easier by changing the rate of indexation.
Tink has also previously called for the date of indexation to be shifted to November.
Australian National University higher education policy expert Professor Andrew Norton said the date should be later, given the ATO gave people until the end of October to lodge their returns.
He said that while dealing with the rate of indexation was a priority, he was concerned the accord panel’s recommended fix was too confusing, suggesting instead it should be tied to the lower of CPI or 4 per cent.
“[It’s] the right compromise between ensuring some offset from the government lending all this money while managing the risks for students,” he said.
Cut through the noise of federal politics with news, views and expert analysis. Subscribers can sign up to our weekly Inside Politics newsletter.