Education Minister Jason Clare’s promise to review the grossly unfair ATO HECS payment system is up in smoke with revelations in Senate Estimates there are no plans for reform.
In questions I raised this evening, the Australian Taxation Office said reforming the scheme – which unjustly indexes student debt already paid off during the financial year – would be too complex and expensive. Finance Minister Katy Gallagher confirmed there were no plans for reform.
Under the Albanese Government, some three million Australians have been hit with massive increases in their student loans as a result of Labor’s sky-high inflation rate.
In just two years, student loans have increased by 11 per cent, with last year’s increase of 7.1 per cent the highest indexation rate in 30 years. Under the Coalition, HECS indexation averaged under 2 per cent.
Currently, the ATO HECS payments system does not account for repayments in real time. That means if someone with a $20,000 loan pays off $5,000 during the financial year, they will be indexed on the full $20,000 – not the lower balance of $15,000. Similarly, anyone repaying a loan in full can still be hit with an indexation charge.
This is not right and not fair.
Escalating student debt is crippling many young Australians including by limiting their borrowing capacity to purchase a home.
This news is further evidence Jason Clare is tone-deaf to the cost-of-living crisis so many young Australians are facing.