New laws that will wipe hundreds of dollars from the university debts of millions of Australians have passed the Senate.
The legislation will change how annual indexation charges on HECS-HELP debts are calculated.
Currently, it’s based on the Consumer Price Index, which caused loans to surge by 7.1 per cent last year.
Now, it will be determined by what is lower of the CPI or the Wage Price Index.
The average debt will be reduced by $1200 and anyone still owing money as of June last year will receive a refund or credit.
The indexation change for HECS-HELP debt was included in this year’s federal budget but the government has bigger plans in store.
Combined, that would raise the $3 billion in savings from the newly passed changes to a total of about $20 billion for just under 3 million Australians with student debt.
Education Minister Jason Clare said it was the first in a series of reforms recommended by the Australian Universities Accord that he wanted to implement.
“The Universities Accord recommended indexing HELP loans to whatever is lower out of CPI and WPI,” he said.
“We have done this and gone further. We have backdated this reform to last year. This wipes out what happened last year and makes sure it never happens again.
“Now that legislation has passed, the ATO will automatically apply these credits as soon as possible.”
The Coalition opposes the 20 per cent reduction, which Nationals leader David Littleproud called a “profoundly unfair policy”.
Universities appear poised to be a major issue in the lead-up to next year’s federal election.
“There is more to do. That includes changing the way we fund universities,” Clare said.
