Three million students with a HECS-HELP debt will be slugged an increase on what they owe on Saturday.
Students will have a 4.7 per cent indexation increase applied to their HECS debt and other higher education loans.
However, those hit by the increase will receive a credit on their loan after legislation goes through later this year.
For a graduate with an average student debt of $26,494, their debts will rise by an additional $1,245 and they will receive a credit of $1,194.
Interest is not charged on student loans.
Instead, the indexation rate is added to take into account changes to the price of goods and services, which is measured in Australia by the consumer price index.
The average indexation rate was just below 2 per cent over the last decade.
However it has skyrocketed in keeping with rising inflation. In 2023 the rate reached a hit a decade-high of 7.1 per cent.
Almost three million university students (pictured) will have their student loan repayment, HECS, increased by 4.7 per cent
In May’s Federal Budget, the government announced it will wipe $3billion from HECS debt indexation for struggling students.
Minister for Education Jason Clare said: ‘We are doing this, and going further. We will backdate this reform to last year. This will wipe out what happened last year and make sure it never happens again.’
On average, the amount of money students owe to the ATO on their HECS and HELP debt will be cut by $1,200.
The change will apply to all HELP, VET Student Loan, Australian Apprenticeship Support Loan and other student support loan accounts that existed on 1 June last year.
The government will also change how indexation to student loans is calculated.
This measure will be backdated to June 1 last year, which means all student debts that were indexed in 2023 will also be reduced.
Under Labor’s plan, indexation of HELP or HECS debt will be based on whatever was lower out of the Wage-Price Index (WPI) or the Consumer Price Index.
If the legislation is passed, the HELP debt will then be adjusted to reflect the lower indexation rate of 4.0% WPI in 2024.
Australians owed a combined $78.2 billion in HECS-HELP debt as of the 2022-23 financial year.
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