Millions of Australians will have hundreds of dollars of their HECS debt wiped clean after the government passed new laws that will change the way student loans are indexed each year.
About $3 billion will be eliminated from more than three million Aid loans, with the average balance of $27,000 resulting in a refund of about $1,200.
Refunds will now be processed automatically by the ATO.
The new laws were introduced after Australians were hit with a huge 7.1 per cent annual indexation rate on June 1, 2023, after inflation soared to rates not seen since 1990.
From June 1 next year, HECS loans will be indexed in line with the Consumer Price Index (CPI) or the Wage Price Index (WPI), depending on which figure is lower, as a way of ensuring that rates are not exceeded by wage growth. .
The 2023 indexation rates of 7.1 percent and 2024 rates of 4.7 percent will also be changed to 3.2 percent and 4 percent respectively.
Three million Australians will have hundreds of dollars of their HECS debts wiped clean. In the photo, a student at the University of Melbourne.
Those who paid off their loans after the June 1, 2023 increase will receive a refund in their designated bank account, as long as they have no other existing tax debts.
A HECS debt, including HELP, VET Student Loans and Australian Learning Support Loans, of $15,000 will receive a credit of $670, a loan of $100,000 will receive a credit of $5835.
Federal Education Minister Jason Clare said the new law would prevent Australians from being hit by high indexation rates due to inflation spikes.
“Now that the legislation has been passed, the ATO will automatically apply these credits as soon as possible,” he said.
About $5,520 will be removed from the average $27,000 HECS loan after the government passed new laws that will change the way student loans are indexed.
And there is more to come. If we win the election next year, Labor will reduce all student debt by a further 20 per cent and make payments fairer.
Ahead of next year’s federal election, Labor has also pledged to scrap 20 per cent of all student loans, totaling about $16 billion.
This means that the average debt of $27,000 will have about $5,520 shaved off the outstanding amount.
Accounts with more than $60,000 will have more than $12,000 deleted.