Labor’s May Budget presents a real test for Education Minister, Jason Clare, over whether the Albanese Government will do anything other than conduct a myriad of education reviews and deliver a financially crippling HECS-HELP (HECS) debt indexation rate of 7.1 per cent.
The indexation rate, which is tied to CPI and will apply from 1 June 2023, will drive up the average HECS student loan by $1,700. While student loans are interest free, they are subject to indexation.
For a student with a $90,000 HECS debt on an income of $74,000, the average starting salary for graduates, this means an increase in student debt of $6,300 in a year.
“There has been nothing but silence from Mr Clare following the ATO’s announcement that student loans will be hit with a crippling 7.1 per cent indexation rate, the highest in 30 years, as a result of Labor’s failure to combat inflation,” Senator Henderson said.
“With some 3 million Australians carrying a student loan, what is the Albanese Government doing to combat the cost of living crisis faced by so many students and graduates? Mr Clare needs to do more than put his head in the sand,” Senator Henderson said.
“Skyrocketing student debt is a direct result of Labor’s failure to combat sky high inflation.”
“This comes at a time when Labor is proposing a new Startup Year loans scheme for student entrepreneurs which will hit them with a potential debt of $23,000 with little or no benefit. This demonstrates Labor could not care less about the cost of living burden so many higher education students are carrying,” Senator Henderson said.
“While Jason Clare is caught up in a vortex of reviews, what is Labor doing about declining school standards despite record schools funding, the crisis in the teaching profession, a school curriculum which is not delivering for students and skyrocketing student debt? In the May Budget, the Albanese Government must start delivering solutions for parents, teachers and students,” Senator Henderson concluded.
BACKGROUND:
On 1 June each year, indexation is applied to the part of an accumulated study and training loan that has remained unpaid for more than 11 months, for:
- Higher Education Loan Program (HELP)
- VET Student Loan (VSL)
- Student Financial Supplement Scheme (SFSS)
- Student Start-up Loan (SSL)
- ABSTUDY Student Start-up Loan (ABSTUDY SSL)
- Trade Support Loan (TSL).
The ATO indexation rate since 2014 is as follows:
- 2023 – 7.1%
- 2022 – 3.9%
- 2021 – 0.6%
- 2020 – 1.8%
- 2019 – 1.8%
- 2018 – 1.9%
- 2017 – 1.5%
- 2016 – 1.5%
- 2015 – 2.1%
- 2014 – 2.6%