Three million students with HECS-HELP debt will receive an increase in what they owe on Saturday.
Students will have a 4.7 per cent indexation increase applied to their HECS debt and other higher education loans.
However, those affected by the increase will receive a credit on their loan after the legislation takes effect later this year.
For a graduate with an average student debt of $26,494, their debts will increase by an additional $1,245 and they will receive a credit of $1,194.
There is no interest charged on student loans.
Instead, the indexation rate is added to take into account changes in the price of goods and services, which in Australia is measured by the consumer price index.
The average indexation rate was just below 2 percent over the past decade.
However, it has skyrocketed in line with rising inflation. In 2023, the rate hit a decade high of 7.1 percent.
Almost three million university students (pictured) will see their student loan repayments, HECS, increased by 4.7 per cent
In May’s federal budget, the government announced it will remove $3 billion of HECS debt indexation for struggling students.
Education Minister Jason Clare said: ‘We are doing this and going further. We will rewind this reform to last year. “This will erase what happened last year and ensure it doesn’t happen again.”
On average, the amount of money students owe the ATO for their HECS and HELP debt will be reduced by $1,200.
The change will apply to all HELP accounts, VET student loans, Australian Learning Support Loans and other student support loan accounts that existed on June 1 last year.
The government will also change the way student loan indexation is calculated.
This measure will have a retroactive date to June 1 of last year, which means that all student debts that were indexed in 2023 will also be reduced.
Under Labour’s plan, indexation of HELP or HECS debt will be based on whichever is lower in the Wage Price Index (WPI) or the Consumer Price Index.
If the legislation is passed, HELP debt will be adjusted to reflect the lower indexation rate of 4.0% WPI in 2024.
Australians owed a combined total of $78.2 billion in HECS-HELP debt as of the 2022-23 financial year.