Recently, the Australian Government announced plans to wipe out $3bn in Higher Education Contribution Scheme (HECs) debt. Let’s take a closer look and see what these changes mean for students and early career professionals.  

In short, HECS debts are what many of us accumulate while pursuing higher education. It can feel like a financial shadow that follows us into the workforce, impacting our ability to thrive and achieve our goals. At the same time, it is a really essential system, in that it gives us the opportunity to go to Uni without having to pay upfront. However, the debt we build up and the indexation of this debt is something important to be aware of.

Why our student debt grows even when we’re no longer studying

Indexation, in simple terms, is the adjustment of debt according to inflation (inflation being a key concern in our economy at the moment). Previously, HECS debts were linked to the Consumer Price Index (CPI), a measure of the average change over time in the prices paid by consumers for a market basket of consumer goods and services. Now, the government has shifted to indexing our debts according to either the Wage Price Index or CPI – whichever is lower. Sounds confusing? Here’s the bottom line: this change means our debts will likely grow more slowly in the fuure.

Data shows the average HECS debt for graduates sits between $20,000 to $30,000. Some of us (like me) may have not thought about their student loan too much, and ended up racking up something a lot higher. With the new indexation method, while our debts might not balloon as quickly, they’re still there. Generally, HECs debt is repaid at a certain percentage rate, depending on how much you earn.   

Click here to see how much you’ll pay back each year, depending on how much you earn.

Where to get support

So, what can we do if we want to study, but are worried about student debt? It’s essential to stay informed, to understand our rights and options when it comes to managing our HECS debts. Seek advice from financial counsellors or student support services. Even looking to our Uni’s Indigenous student resources centre for support, as we are paying for it. Explore repayment options, like income-contingent loans, which adjust repayments based on our income. And don’t be afraid to speak up, to advocate for better support. We deserve a chance to pursue our dreams without the weight of debt dragging us down.

In conclusion, while the government’s announcement regarding relief for HECS debts and changes in indexation might reduce how much you have to pay back if you already have a student loan, it’s likely the debt will still be there until completely paid off. It’s important to know your rights, how to repay more if you choose to and where to get help if you need it.

Like every article on this website, this is not personal financial advice.

If you need support with debt, you can contact the National Debt Helpline on 1800 007 007.