University graduates, already “treading water” amid the cost of living crisis, are set for more financial pain.
Student debt is set to increase by thousands of dollars this year after inflation figures came in slightly higher than expected.
HECS debt is expected to increase by 4.8 per cent when indexation is applied on June 1, according to analysis of inflation data cited by the Greens.
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It’s higher than the 3.6 per cent inflation figure for the year to March due to the calculation method.
The average HECS debt is about $26,500 which means the average student debt will increase more than $1250, while education costs rose 5.9 per cent, according to inflation data released on Wednesday.
“This is untenable,” independent MP Monique Ryan said.
“Hundreds of thousands of Australians with a HECS debt are either treading water or seeing their HECS debts increase despite working hard to pay them off,” she said.
The mandatory HECS repayments for people on $60,000 would have been about $1200 in the past year, but this would have barely made a dent in the overall debt due, Ryan said.
The increase will come into effect on June 1 and will be lower than last year’s 7.1 per cent hike.
The Greens have also criticised indexation, saying it was locking young people out of the housing market.
“Ballooning student debt is hitting young people, women, and renters the hardest, the same people who are being slammed by the cost of living and housing crisis,” Greens senator Mehreen Faruqi said.
The University Accord report recommended changes to the HECS system.
Finance Minister Katy Gallagher has been tight-lipped about whether there will be any changes in the upcoming May budget but says the government has been looking at HECS.
“We’ve been looking at all of the issues that have been raised through the University Accord and there were some issues raised around indexation and how HECS, the program is run,” she said on Wednesday.
Issues around HECS indexation arose when Australia was going through high inflation, such as last year’s hike, Gallagher said.
“So when you think about changing things, you’ve got to be mindful that there are ups and downs to this … when inflation is low,” she said.
About three million Australians owed $74 billion in student loan debt as of June 1, 2023.