Three million Australians will see $3 billion wiped from their student debt after the Albanese Government passed legislation through the Parliament tonight.
This legislation fixes the way indexation is calculated on student debt and will be backdated to 1 June 2023.
The Universities Accord (Student Support and Other Measures) Bill 2024 caps the HELP indexation rate to the lower of either the Consumer Price Index (CPI) or the Wage Price Index (WPI).
This change applies to HELP, VET Student Loan, Australian Apprenticeship Support Loan and other student support loans.
This will benefit all Australians with a student debt, fixing last year's spike in the indexation of 7.1 per cent and preventing indexation from outpacing wages in the future.
This means the 7.1 per cent spike in indexation in 2023 will be reduced to 3.2 per cent (based on the lower WPI), and credits provided via the ATO.
The indexation rate for 2024 will also be reduced from 4.7 per cent to 4.0 per cent.
An individual with an average HELP debt of around $27,000 will see around $1,200 wiped from their outstanding HELP loans.
The ATO will automatically apply these changes to everyone with a student loan. This work will happen as soon as possible.
If someone has completely repaid their student debt after 2023 or 2024 indexation was applied, the credit would be via a refund to their bank account (assuming there are no outstanding government debts).
*Actual credit amount will vary depending on individual circumstances including repayments made during the year. All HELP debts that were indexed in 2023 and 2024 will receive an indexation credit.
Australians with a HELP debt can find out how much this is estimated to benefit them using the HELP Indexation Credit Estimator here.
The Bill also supports the introduction of the Commonwealth Prac Payment from 1 July 2025 for around 68,000 higher education teaching, nursing, midwifery and social work students to help support them financially while they do the practical part of their degree.
It also expands FEE-FREE University Ready Courses which acts as a bridge between school and university to help more Australians get a crack at university and succeed when they get there.
This is part of the first stage of reforms the Albanese Government will implement in response to the Australian Universities Accord.
This is just the first stage of our reforms to make HECS fairer. Next year, the Albanese Labor Government will cut a further 20 per cent off all student loan debts, raise the minimum repayment threshold for student loans and cut repayment rates.
Quotes attributable to Minister for Education Jason Clare:
"The Albanese Government has wiped $3 billion in student debt from more than three million Australians.
"The Universities Accord recommended indexing HELP loans to whatever is lower out of CPI and WPI.
"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.
"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."
