How will the change work?
The government will make the change retrospective,once it passes legislation.
Given the wage price index up until September last year had been below 4 per cent,it means the indexation rate for June 1,2023,will be slashed from 7.1 per cent to 3.2 per cent,and the rate for June 1 this year will be cut from 4.7 per cent to 4 per cent.
What that all means is once the legislation has passed,the government will apply a credit for the difference between the rates of indexation on all existing student loans.
Has HECS debt been wiped?
No.
The government is just giving some money back as part of a cost-of-living relief measure,and the change has not yet taken effect.
The government needs new legislation to make this happen,and the bill is unlikely to be put before the House of Representatives during the next sitting of parliament in the coming fortnight.
It means the original June 1 indexation rate of 4.7 per cent will be applied to all debts,but that is factored in to the government’s budgeting,which is why its calculations also include a credit for 2024.
Using the Education Department’sHELP indexation credit estimator,someone with a student loan of $20,000 would get a $730 credit for the 2023 change and a $170 credit for the 2024 change,for a total of $900 knocked off their debt. Someone with a $60,000 debt would get a total credit of $2690.
How do I get the HECS debt credit?
Loading
People with HECS debts don’t need to do anything to receive the credit. It will be applied automatically by the Australian Taxation Office once the legislation has passed.
The ATO is also the place to go to see how much debt you have left.
What happens if I recently paid off my HECS debt?
Anyone who paid off any outstanding debt since June 1 last year will still receive the credit. If there are no new student loans,that credit will simply become a tax credit.
That means people with no outstanding HELP debt,or other Commonwealth tax debts,will receive the credit as a tax refund,mostly likely in the upcoming financial year.
Cut through the noise of federal politics with news,views and expert analysis.Subscribers can sign up to our weekly Inside Politics newsletter.