Australian Taxation Office reveals list of the nation’s heftiest HECS debts

If you’re worried your single bachelor’s degree is taking longer than expected to pay off, take a look at these poor buggers.

If you’re worried your single bachelor’s degree is taking longer than expected to pay off, take a look at these poor buggers.

Astonishing revelations about the magnitude of university debt in Australia have been brought to light through a Freedom of Information disclosure this week.

According to the release, some students are struggling with bills that exceed half a million dollars.

On Wednesday, the Australian Taxation Office unveiled the top 100 students with the highest debts, disclosing that the nation‘s most indebted student owed an astronomical $737,070.48 to the government. This amount far surpassed the second-highest debtor who owes $495,990.47.

Over 25 individuals owe more than $250,000 on their Higher Education Loan Program (HELP) debts, which was formerly called the Higher Education Contribution Scheme (HECS) since its inception in 1989.

These university graduates, who may have studied costly subjects such as medicine or law, are likely to experience a significant increase in their debt in just seven weeks’ time.

Although no interest is levied on HELP/HECS debts, the debts are adjusted for inflation every June 1, through a process called indexation. The current indexation rate, set in June 2022, is 3.9 per cent, up from the previous year’s 0.6 per cent.

In 2023, an average of $1,500 will be added to student loans. However, for those with debts of a quarter, half, or three-quarters of a million dollars, the increase will be much more significant.

If the largest HELP/HECS debtor fails to pay off some of their debt by June 1, they will see their debt increase by a staggering $28,745 to $765,816.

The second-largest debtor will face an additional $19,343 in less than two months, taking their debt over the half-million mark to $515,334.

Although no interest is levied on HELP/HECS debts, the debts are adjusted for inflation every June 1, through a process called indexation.

For those earning $62,738 or less, HECS debts will increase faster than they can pay it off, on a HECS debt of $23,685 – the national average.

Even higher income earners bringing in as much as $99,996 will be unable to match the rate of indexation on a $100,000 loan without making additional voluntary repayments.

HECS-HELP debt is paid through the Australian taxation system once an individual‘s income surpasses the mandatory repayment threshold, which is currently $48,361.

Roughly three million graduates in Australia have outstanding student loans.

According to the National Union of Students (NUS), this year will witness the most significant indexation increase in decades. In a submission to a Senate hearing on the cost of living last month, the NUS claimed that students required immediate assistance.

someone FOI'd the top 100 hecs debts. shout out to the person rocking with 737k pic.twitter.com/haPdQbCY3c

— cameron wilson (@cameronwilson) April 12, 2023

Justin Joffe, co-founder of youth financial literacy platform Flux Finance, said many students are unaware of the impact their loans can have later down the line. HECS-HELP loans don’t accrue real interest like a bank loan which can give students a false sense of security, he said.

“I think that if indexation continues to grow over the next couple of years, and the repayments become really, really expensive, we’re going to have a lot of students who start to reconsider whether it’s actually worthwhile to go to university if they’re going to be saddled with so much debt when they come out of it,” Mr Joffe said.

The steep increase has sparked a call to freeze indexation, spearheaded by university and student unions and backed by the Greens in the form of legislation currently before the Senate.

At a public hearing on the bill in Sydney, Queensland University of Technology Student Guild representative Usama Shafiq argued students are “plagued” by the stress of indexation and the extra financial burden placed on them.

“The most concerning factor here is that students really are paying back their loans but despite their payments, the odds are stacked against them,” he said.