Millions of Aussies will have hundreds of dollars wiped from their HECS debt after the government passed new laws which will change how the student loans are indexed each year.
About $3bn will be removed from more than three million Help loans, with the average balance of $27,000 incurring a refund of about $1200.
The refunds will now be automatically processed by the ATO.
The new laws were introduced after Australians were hit with a massive 7.1 per cent annual indexation fee on June 1, 2023 after inflation soared to rates unseen since 1990.
From June 1 next year HECS loans will be indexed in line with either the Consumer Price Index (CPI) or the Wage Price Index (WPI), depending on which figure is smaller, as a way to ensure the rates are not outpaced by wage growth.
The 2023 indexation rates of 7.1 per cent, and 2024 rates of 4.7 per cent will also be changed to 3.2 per cent and 4 per cent respectively.
Three million Aussies will get hundreds of dollars wiped off their HECS debts. Pictured are student at University of Melbourne
Those who paid off their loans after the June 1, 2023 hike will receive a refund to their nominated bank account, providing they don’t have any other existing tax debts.
A HECS debt, which includes HELP, VET Student Loan, and Australian Apprenticeship Support Loans, of $15,000 will receive a $670 credit, a loan of $100,000 will be credited $5835.
Federal education Minister Jason Clare said the new law would prevent Australians from getting slugged with high indexation fees due to inflation spikes.
‘Now that legislation has passed, the ATO will automatically apply these credits as soon as possible,’ he said.
About $5520 will be wiped from the average HECS loan of $27,000 after the government passed new laws which will change how student loans are indexed
‘And there’s more to come. If we win the election next year, Labor will cut all student debt by a further 20 per cent and make repayments fairer.’
Ahead of next year’s federal election, Labor has also committed to wiping 20 per cent of all student loans, totalling to about $16bn.
This means an average debt of $27,000 will have about $5520 slashed from the outstanding amount.
Accounts with more than $60,000 will have more than $12,000 wiped.
