min read
· Posted on
April 26, 2024

What’s happening to my HECS-HELP loan this June?

Students loans are set to go up by 4.7% on June 1 this year

What's the key learning?

  • HECS-HELP debts are expected to go up by 4.7% on June 1
  • While there's no interest charged on HECS-HELP debts, they are indexed (adjusted in line with inflation)

It looks like inflation really isn’t done with us yet. 

HECS-HELP debts are set to be indexed to 4.7% from June 1 this year.

As a refresher, the HECS-HELP scheme is where your university or higher education fees are paid for by the government up-front, and then the government gives you an interest-free loan to repay your student fees later.

Yes, it’s technically interest free. Yes, you get to access higher education. And yes, you don’t need to start repaying until you reach a certain income level  (in the 2023-24 financial year, it’s $51,550).

Buuuuuuut there’s a catch.

You’re right buddy... 

While there’s no interest charged on HECS-HELP debts, they are indexed, meaning each year your student debt is adjusted in line with inflation.

The idea is that your debt maintains it’s ‘real’ value in today’s world.

Now, for the past 10 years, this hasn’t been a huge issue because indexation has remained at around 2%. 

So, if a HECS-HELP debt of $10,000 would be indexed to around $10,200.

A pinch, but in the long run you probably wouldn’t have noticed it much.

This “indexation” occurs on June 1st each year.

But this year, inflation has jumped by 3.6%, and while that’s a significant decrease from the 7% this time last year, it’s still well above the RBA’s target inflation of 2-3%

As HECS-HELP debts are indexed largely in line with inflation, they’ll be going up 4.7% this year.

In fact, in just three years student loans have risen by 15.7%.

What does that mean for my HECS-HELP loan?

Australians with an average HECS-HELP debt of $26,494 are expected to see their balance increase by at least $1,245 when the indexation hits on 1st June.

Usually, experts advise you to delay paying down your HECS-HELP debt for as long as possible and prioritise other debts ahead of it - but with the new indexation announcement, some people might need to reconsider their financial priorities. 

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