Call to freeze indexing of rapidly rising HECS debts

Crucial crossbenchers are urging the Albanese government to stop a yearly hike to student debt which will hit almost three million Australians amid a crushing cost of living crisis.

Exclusive: Crucial crossbenchers are urging the Albanese government to stop a yearly hike to student debt which will hit almost three million Australians amid a crushing cost of living crisis.

Students and graduates will owe the government a whopping $84 billion in HECS-HELP debt in June, when the value of student loans increases in line with inflation.

Average HECS-HELP debts are likely to increase by $1000 in June, leaving millions of Australians owing the government more despite Prime Minister Anthony Albanese’s promise to deliver cost of living relief through tax cuts.

Key senate crossbencher Jacqui Lambie on Wednesday declared that hiking student loans every year in line with inflation was a “whole new low”.

“Profiting off our kids, how revolting is that?” she said.

Kiera Rorris has accumulated a HECS debt of $13,000 through her studies. Picture: Richard Dobson

“I don’t think HECS should be indexed, we should be making it easier for young people to get ahead, not harder.”

Independent senator David Pocock also backed changes to student debt, which he said is becoming “increasingly an issue”.

“Even tying indexation of student debt to something like the long term government bond rate would be an improvement,” he said.

NSW Greens Senator Mehreen Faruqi reiterated her party’s call for the debt to be frozen.

“Scrapping indexation would be a start to give reprieve to so many people, especially women and young people, who are struggling in this cost of living crisis,” she said.

Independent Fowler MP Dai Le said Generation Z called for student loans to be frozen.

“Despite the Stage 3 tax cuts, students are still locked into HECS debt repayments,” she said.

“I ask the government to freeze HECS indexation so it gives students breathing room otherwise Generation Z will fall behind. Debts will continue to pile up. This has to stop.”

Crossbench senator Jacqui Lambie says indexing HECS debt is “a whole new low”. Picture: NCA NewsWire

Student debt (worth $78 billion in June last year) increases every 12 months, in line with inflation.

The average student debt of about $26,500 could increase by more than $1000 if inflation matches the 4.1 per cent increase in December. It comes on top of a 7.1 per cent spike last year.

The increase to HECS debts could end up being higher than the value of yearly tax cuts Australians are set to receive from July

People earning $50,000 per year or less who do not repay HECS will get an extra $929 back per year in tax cuts under Mr Albanese’s reworked Stage 3 tax cuts, while those earning $90,000 will be $1,929 better off.

Kiera Rorris who has accumulated a HECS debt through her studies. Picture: Richard Dobson

But the tax cuts are likely to be swallowed up by increasing everyday expenses, like a looming $12 increase in visiting a GP, as well as higher taxes on fuel, beer and spirits.

Education Minister Jason Clare refused to back calls for a freeze but said a report into tertiary education, including how HECS-HELP “interacts with the tax system,” would be released shortly.

He said student loans are “built on a really important principle — you pay what you can afford”.

Student Kiera Rorris labelled the HECS indexation “ridiculous”.

Ms Rorris, 20, studied a year of exercise and sport science at the Australian Catholic University before switching to vet nursing at TAFE, leaving her with a HECS debt of $13,000.

“It’s hypocritical to bring in a tax cut to then make us pay it in a different way. They are pretty much just moving the money from one place to another,” she said.
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Originally published as Call to freeze indexing of rapidly rising HECS debts