Students would save $3bn over a decade if Labor changed Hecs indexation date by five months
Summary
A change in the date when student loan debts (HECS) are adjusted for inflation could save Australian graduates more than $3 billion over ten years. The proposal suggests moving the indexation date to after payments are made, so debts reduce properly and more fairly over time.Key Facts
- About 3 million Australian students and graduates have HECS debts that increase yearly by around 2.8% due to inflation or wage growth.
- Currently, payments made by graduates are collected by the tax office but only deducted after the debt has already been increased by indexation.
- Changing the indexation date from June 1 to November 1 would save graduates money by applying indexation after payments, reducing their loan balances more fairly.
- This change would cost the government $1.2 billion in revenue over four years.
- Independent MP Monique Ryan called the current HECS system “broken” and urged reform to reduce the debt burden on young Australians.
- The savings would start at $58 million in the first year and grow to over $150 million annually by 2035-36 as more students take loans and fees rise.
- Labor has already made some HECS changes, including lowering indexation increases and promising to cut debts by 20%.
- Education Minister Jason Clare said more work is needed to make university degrees cheaper and easier to get.
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