Australians who pursue higher education now face the risk of a lifetime of crippling student debt.
The Albanese government’s announcement it will lower upfront HECS repayments will dramatically increase the time it takes to repay a student loan, driving up indexation and total debt.
The government must come clean on how much more this will cost three million Australians with a student loan.
For those on low incomes, this could consign them to a lifetime of debt.
Labor’s HELP repayment proposal means a person earning $70,000 with an average student loan of $27,000 will pay just $450 a year off their loan. Putting aside the impact of indexation, this would take a staggering 58 years to repay.
Currently, a graduate earning $70,000 a year takes around 13 years to repay their debt at an average rate of $2,106 per year.
Higher student debt makes it harder for young Australians to secure a bank loan and buy their first home.
Since Labor was elected, student debt has skyrocketed by 16 per cent or a staggering $8.1 billion, driven by Labor’s high inflation and economic mismanagement.
For someone with an average loan, that’s an extra cost of more than $4,000.
This is in contrast to annual HELP* indexation of just 1.7 per cent under the former Coalition government.
Today’s announcement also confirms Labor is in policy chaos, given there is currently a bill before the Parliament to change HECS indexation as recommended by the University Accord panel.
If this bill is passed, student debt will still rise by 11.1 per cent under the Albanese government.
Young Australians continue to pay a very high price under Labor’s cost of living crisis.
*Higher Education Loan Program