In short, not really. But your HELP balance will still go down.
The long story is the Government have announced as a part of this 2024/25 Federal Budget they’ll be changing the way study loans are indexed.
What is indexation?
HELP (formerly HECS) doesn’t generate interest in the same way as regular loans, but they are adjusted, or indexed, using the Consumer Price Index (CPI) on 1 June each year.
The idea is that indexation is applied to your debt to maintain its ‘real’ value, but with inflation over the past few years loan holders have had more money added to what they owe.
Now, as part of this year’s Federal Budget the Government have announced they’ll be passing legislation that will mean HELP balances will be indexed by whichever is lower, the CPI or Wage Price Index (WPI).
They’ll also be retrospectively changing the indexation of 2023 from 7.1% to 3.2% and crediting the difference to your loan balance.
Because the legislation will not have passed before loans are indexed for 2024 next month, balances will also be credited for the rate changing from 4.7% to 4%.
When loans were indexed in 2023 there was a lot of advice circulating that loan holders should try to pay off their balances – if you managed to do this, you’ll still be credited for the changes in rates and without an existing balance you’ll just get that money back.
Obviously seeing student debt go down is great – especially when the money credited came from indexation, not classes.
If you want to work out how much will come off your study loan, the Department of Education have a calculator you can use – all you need to know is the balance of your HELP debt as at 1 June 2023 which you can find on your account with the ATO (via myGov).
To not have thousands added to your student loans is absolutely a win.
But is it wiping student debt? Not really, more just making one element of higher education less expensive and decreasing the government’s profit margin on student debt.
It’s still hugely expensive to obtain higher education, and the budget missed opportunities to address the costs associated with higher education whilst studying outside of fees, particularly for regional and rural students.
With no increase to Youth Allowance (or expansion of eligibility) and a maximum increase of $9.40 to rent assistance higher education remains an enormous financial burden on so many young Australians.
