The big HECS debt changes coming into effect on July 1 2024

The federal government has announced that HECS will be indexed by the lower of the WPI or the CPI, but what does this mean for the amount you owe?

Transcript

00:00 The federal government has announced big changes to HECS starting in June.

00:04 So what does this mean for your debt?

00:06 Student loans are usually indexed according to the Consumer Price Index, or CPI,

00:11 which measures the change in the cost of a metaphorical basket of consumer goods

00:15 (bread, shoes, transport, houses).

00:18 Last year, the CPI went up 7.1%,

00:21 while wages, measured by the Wage Price Index, or WPI, only rose by 3.2%.

00:27 From this year, the government wants HECS to be indexed at the lower of the two,

00:31 hopefully preventing the indexation rate from outstripping wage growth.

00:35 But at 3.2%, that's still the highest indexation rate since 2009.

00:40 The new system applies retroactively to last year,

00:45 so whatever you owed last June 1 will now be re-indexed at 3.2%,

00:49 replacing the original 7.1%.

00:52 If you'd had $100,000 of HECS debt, that difference amounts to over $3,500.

00:57 So where does that money go?

00:59 If you paid off your HECS debt last year,

01:01 you'll receive a tax credit that will be applied to any outstanding debts you have with the ATO.

01:05 If you don't owe the ATO any money, keep a lookout for a nice tax refund coming your way.

01:10 If you do still have HECS to pay off, the lump sum of your debt will go down slightly.

01:15 As of right now, the legislation needed to bring the WPI into the equation hasn't been passed into law.

01:21 If it gets through by June 1, HECS will be indexed at the CPI as usual,

01:25 and another round of credits will be issued.

01:27 [ Silence ]