Hidden cost hurting young Aussies dealing with cost-of-living pressure

Young Aussies already dealing with cost-of-living pressures are being stung by a hidden cost, forcing many to rethink their futures.

Students have been slapped with a sharp rise in debt as cost-of-living pressures mount. ​

Concerned young Australians are reassessing their future with student-debt balances rising across the country amid cost-of-living pressure.

Current and former students suffered a frosty start to winter with a 3.9 per cent increase to HECS-HELP debt balances – a significant jump on last year’s rate of 0.6 per cent – coming into effect on June 1.

Student-debt balances don’t attract interest but are tied to the consumer price index, which measures the cost of living.

Put simply, inflation is also applied to student debt, and takes effect from June 1 each year.

Australian Taxation Office records show the indexation rate was 1.9 per cent in 2018, 1.8 per cent in 2019 and 2020 and 0.6 per cent in 2021.

In a cruel blow this week, it soared to 3.9 per cent.

With average student debt sitting at $23,686 in the 2021 financial year, students were struck with a mean increase of $920.

Students have copped a sharp increase to their debt balances. Picture: NCA NewsWire / David Geraghty

Architecture undergraduate Danial Kazi says it comes as a rude shock for students who aren’t taught enough about how their debt could affect them down the track.

“It is super concerning,” the 24-year-old told NCA NewsWire.

“There isn’t very much education for uni students – whether it’s by the unis or by the government – about what that debt looks like.

“It’s kind of like, ‘Take on whatever, do whatever you want to do’.

“You end up piling up all the HECS debt and no-one talks to you about indexation rates, no-one talks to you about what the repayment is going to look like, or what that’s going to do to your future.”

Mr Kazi says student debt being tied to cost-of-living proves problematic when graduate salaries don’t reflect the rising rate of inflation.

“You’re not seeing that same rate being mirrored when it comes to income, when it comes to opportunities and graduate jobs,” he said.

“It’s not just trying to pay back that debt. In terms of cost-of-living costs, everything is rising.”

Danial Kazi says young Australians aren't helped by a lack of education on how their student debt affects them. Picture: supplied.

The worried student is now weighing up whether a master’s degree will be worth the financial burden after he completes his bachelor’s qualification.

“Before, I was very happy to finish my bachelor’s and go straight to master’s,” he explained.

“Now, I think I’ll have to work, and then maybe after working for a couple of years I could go for master’s.”

Government relief in the form of the recent fuel excise cut would reassure students they were valued as future contributors to the economy, Mr Kazi suggested.

“When it came to fuel prices, we had a cut on the fuel tax. I don’t understand why that can’t translate into our HECS repayments,” he said.

“The entire point of an education is so you can contribute to the economy, so in my opinion it’s in their best interests to provide support in that regard.”