Millions of Australians preparing for an increase to their HECS in just a matter of weeks have been hit with more bad news.
Anyone with a HECS/HELP debt who earns more than $48,361 automatically has a percentage of their salary deducted from each wage packet to pay back the loan.
The payments made throughout the year are not deducted until the start of the new income year on July 1.
Millions are set to be hit by a 7.1 per cent indexation increase on June 1.
That means the hike will be applied to the current HECS debt a month before the involuntary payments made over the last year come into affect.
A quirk of Australia’s tax system has been called ‘dishonest’ and ‘cruel’ for costing millions of university graduates hundreds of millions of dollars. The young women are pictured
Anyone with a HECS/HELP debt who earns more than $48,361 automatically has a percentage of their salary deducted from each wage packet to pay back the loan. The University of Sydney is pictured
The Greens’ education spokesperson Mehreen Faruqi said this was ‘fundamentally unjust’ and a ‘debt avalanche is just days away’ when indexation is applied.
‘Desperately needed money is being taken out of people’s pay slips to pay off their student debt when they’re on really low incomes,’ she said.
‘They could be using (that money) to pay for rent, medicines, and food – and I know that many young people are skipping meals to pay their bills.
‘The system is so unfair and unjust and cruel,’ she told the Herald Sun.
Ms Faruqi wants HELP/HECS debt indexation frozen and for the minimum repayment figure to be raised, but discussion of her proposed bill was blocked in the Senate.
Nick Moraitis, CEO of the Foundation for Young Australians, also wants to see changes to the repayments system.
He said those repaying the debt are ‘losing part of their wage every payday’ and that the Australian Taxation Office should ‘reduce their HECS debts as they’re paid’.
The ATO said the repayment system could only be altered by ‘a legislative change’.
Daily Mail Australia contacted Education Minister Jason Clare for comment.
The eye-watering figures Australia’s most in-debt university students are shouldering – and it’s only going to get worse come June 1
By Padraig Collins
The shocking reality of university debt in Australia has been exposed by a Freedom of Information release showing some students are battling bills of more than half a million dollars.
The top 100 students owing the most money to the Australian Taxation Office was released on Wednesday, revealing the nation’s most in-debt student owed an eye-watering $737,070.48 to the government.
Their debt dwarfed the second place holder, who owes $495,990.47.
More than two dozen people owe more than $250,000 on their Higher Education Loan Program (HELP) debts, which was called the Higher Education Contribution Scheme (HECS) when it started in 1989.
The amount these university graduates – who may have studied some of the more expensive courses such as medicine or law – owe is also about to get a lot worse in seven weeks’ time.
The Higher Education Loan Program started in 1989 and was originally called the Higher Education Contribution Scheme. Students are pictured at a graduation ceremony
Interest is not charged on HELP/HECS debts, but they are adjusted for inflation on June 1 each year, in a process known as indexation.
The current indexation rate, set in June 2022, is 3.9 per cent, rising from 0.6 per cent from the year before.
An average of $1,500 will be added to student loans this year, but for those with debts of a quarter, half or three-quarters of a million, the increase will be vastly more.
The biggest HELP/HECS debtor will see the amount they owe rise by a whopping $28,745 to $765,816 if they don’t pay off some of their debt by June 1.
The second biggest debtor will be slugged with an extra $19,343 in less than two months, taking their debt over the half million mark to $515,334.
HECS-HELP debt is repaid through the Australian taxation system once a person’s income rises above the compulsory repayment threshold, which is currently $48,361.
This makes it likely that people with huge debts have accumulated most of it not by their studies, but through rarely or never earning enough to pay it back.
The amount owed would then rise every year through indexation.
There are around three million graduates with outstanding student loans in Australia.
Under the HELP system, students can get up to $109,206 to pay for most university courses, and even more to study more expensive subjects such as medicine or aviation.
This year will see the largest indexation increase in decades, according to the National Union of Students (NUS).
In a submission to a Senate hearing on the cost of living in March, the NUS said students needed immediate help.
‘By increasing the amount of student debt they take on, the government is reducing their ability to take out home loans, further locking them out of the market,’ the union said.
Oscar Chaffey is one of those whose student debt is rising more than most as he is studying medicine.
The third year postgraduate medical student at the University of Sydney told SBS in July, 2022 that ‘I think it’s almost a truism that I’m worried about a debt of almost $50,000 that will only grow by tens of thousands of dollars before I have any means with which to pay it back’.
‘It’s depressing that in Australia, a country where education was once seen as a public good, young people are now expected to place themselves into this much debt in order to get educated,’ he added.
Six Australian universities are ranked amongst the top 100 in the world by the Times Higher Education publication – and with higher rankings come higher fees.
The highest rated Australian institute is the University of Melbourne in 33rd place, followed by Australian National University and University of Queensland, which are joint 54th.
Monash University is ranked 57, University of Sydney is 58 and UNSW is at number 70.
The enormous amounts owed by some former students was met with shock and bewilderment online.
‘And I thought mine was hefty. Brutal,’ said one, reflecting what many thought.
Students are pictured at an entrance to the University of New South Wales in Sydney
‘The post-nominals would be a paragraph long,’ wrote another, referring to the letters after the names of the various debtors, reflecting their degrees.
One person was perhaps being too honest in saying ‘I think I’m one of these’.
But another suggested how such huge debts may have been accumulated.
‘If you go overseas after university, and never earn money in Australia you don’t have to pay it back,’ they said.
