Prime Minister Anthony Albanese has promised to tackle the spiraling debt burden faced by university students facing hefty HECS payments.
On Thursday, the Prime Minister promised to make HECS “simpler and fairer” after admitting average student debt has soared in the last three years.
He blamed high indexation rates – linked to rising cost of living inflation – and increased contributions for subjects such as law and the arts, introduced by the previous government.
“There are a number of areas where we need to do a lot better for the younger generation and HECS is one of them,” Mr Albanese said.
This year, Bachelor of Arts students will pay $16,323 for their course, with government funding of $1,236, bringing the three-year cost to almost $50,000.
Payments on a HECS debt begin once the mandatory payment threshold has been reached. Currently, it takes effect when a graduate begins earning $51,550 a year, with a minimum reimbursement rate of 1 percent annually.
There is no deadline for repaying all debt, but the repayment rate works on a sliding scale, and required minimum contributions increase with increasing income.
On Thursday, Prime Minister Anthony Albanese promised to make HECS “simpler and fairer”.
The crippling cost of living crisis and rising student debt are having a massive impact on recent graduates, with another increase expected in June.
HECS debts are indexed to inflationwhich last year reached 7.1 percent, after rising 3.9 percent in 2022, meaning that the debt often exceeds the payments made and increases the overall total.
This is where the devastating HECS debt spiral can begin.
Amy Jolliffe, a psychology major, said ABC News she She feels stranded and now wishes she had dropped out of school and become a chef, instead of going to university.
Amy says her $64,000 HECS debt prevents her from completing the additional studies needed to work in community mental health.
“I feel completely overwhelmed, disillusioned and hopeless about the future,” she said.
Amy says she is now considering giving up her education and traveling abroad to become a diving instructor.
“I leave behind my country, all my studies, all my hopes, all my dreams… everything I have worked for,” he said.
On Thursday, Albanese said an announcement on a review of HECS was imminent, and that the government was expected to adjust the timing and rate of HECS indexation in the next federal budget.
The crippling cost of living crisis and rising student debt are having a massive impact on graduates, with another hit linked to the HECS debt ratio expected in June.
Independent MP Monique Ryan has so far collected more than 260,000 signatures on a petition calling for reform of HECS.
The total student contribution for a three-year Bachelor of Arts course is now approaching $50,000
She cites cases of debt spirals in which student loans increase faster than they can make payments.
On Thursday, Finance Minister Katy Gallagher said “the cost of living is the top priority” in the May budget.
But higher education policy expert Andrew Norton warns that any change to HECS debt in the May budget would be too late to prevent the next rise.
“Student loans will have seen a 15 per cent increase due to indexation over the last three years,” Mr Norton said.
Norton added: “Indexation wouldn’t be such a problem if debts hadn’t increased so much.”