Labor under fire for HECS/HELP indexation timing
Aussies keen to see their student loan debts cut by 20 per cent as promised by Labor in the federal election may not be so happy when they check their accounts.
Since Sunday, students with HELP or HECS loans would have seen their debts increase by 3.2 per cent as indexation kicked in.
Indexation serves to adjust student loans according to inflation – but the timing at which they are applied has been heavily criticised for years.
'HELP debts aren't actually very helpful,' independent Tasmanian senator Tammy Tyrell said.
'Today, students are watching their debts go up, with the money they've paid through the year nowhere in sight.
'Banks reduce your loan before charging interest. Credit unions do too. Just not the government who pretend someone's repayments don't exist. It's costing students thousands of dollars all because Labor is too lazy to fix its accounting.
'Labor's HELP debt changes are one-off sugar hits. If they're genuine about making a difference for students, they could fix this rigged system when parliament returns. Just count someone's payments before interest is charged.
'It doesn't make sense to me that someone's debt is indexed before taking into account the thousands of dollars they've paid throughout the year,' she said.
'Imagine if banks did that with your home loan – took your money, charged you interest but the repayments don't come off the outstanding balance. I reckon people would be pretty upset about that, so why do we expect students to put up with it?
'A student's HECS-HELP debt should be indexed after the yearly repayments are taken off.
'No matter what the indexation rate is, it's not a fair system when you're indexing badly. We need to change the timing, not the rate.'
Education Minister Jason Clare said Labor's policy to reduce HECS debts by 20 per cent would be backdated to June 1 before indexation was applied.
'It will be the first Bill that we introduce into the parliament when parliament sits for the first time in the last week of July,' Mr Clare told ABC radio.
'What that legislation will do is cut everyone's debt by 20 per cent and backdate that cut. And that's important because every 1st of June in every year HECS debts or student debts get indexed.
'That 20 per cent cut will come into effect before that indexation effectively happens to make sure that we honour the promise we made and we cut everyone's debt by 20 per cent.
The Australian Universities Accord Final Report 2024 determined that the indexation should be applied later in the year after compulsory repayments made during the previous financial year were deducted from a student's balance.
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