Millions of Aussies to face more student debt due to rising inflation. Freeze HECS-HELP indexation.

When I graduated, little did I know that I would not pay off my student loans until I was 52. Millions of Aussie students are about to be hit with more debt due to soaring inflation. This is because of a process called indexation where HECS or HELP loans increase in line with inflation, which doubled my debt while I spent time out of the workforce raising my family.

I’m calling on the government to free student debt by abolishing HECS-HELP indexation. Huge student loans shouldn’t add to the financial stress Australians are already facing in the current cost-of-living crisis. Student debt shouldn’t be increasing at a time wages are stagnating and banks are offering interest rates lower than inflation levels.

As a young person, I didn’t understand the financial implications of my student loan, and how it would haunt me for most of my life. For years it felt that the loan hardly seemed to be going down despite all repayments.

Indexation adds to the economic disadvantage of women as it tends to take them longer to pay off their debt because of lower incomes and time off for raising families. This means that women are unequally impacted by the annual indexation which raises their principal debt. This leads to a spiral of debt, as the principal debt grows, the percentage of indexation is more keenly felt.

Many young people are seeing student loans as yet another obstacle to entering the already competitive property market.

On June 1 this year, the HECS debts are predicted to be indexed at a high rate of 7%, causing many people's student loans to increase by thousands of dollars overnight.

The ATO doesn’t deduct compulsory repayments from a student or graduate's balance immediately. Instead, the Australian Tax Office keeps the year's worth of repayments and only deducts them from the debt once a tax return was lodged and indexing had already been applied. In other words, the ATO is holding onto your money - NOT applying it to your debt, and then indexing you on the maximum amount that they can, while simultaneously holding onto your payments made throughout the year.

If you support calls to freeze the practice of indexation and call for the 3.9% indexation increase of 2022 to be refunded, please sign and share this petition. I am hoping to have 5,000 signatures to present to Members of Parliament before the government releases the Commonwealth Budget in May.  

Source: My original change.org petition and news story- March 29, 2023: https://www.9news.com.au/national/millions-of-aussies-with-hecs-help-student-loans-to-be-hit-with-more-debt-thanks-to-indexation/65d77efa-bda7-435e-9df7-8ed92c5acac3