Key Points
- Up to 3 million people will be hit with increases to their student debts on Thursday.
- They will increase in line with indexation - 7.1 per cent.
- Crossbench MPs have called for a freeze on indexation.
Jane Body has calculated she'll be paying off her university degrees until she's at least 65.
She told SBS News she's worried about the effect a growing debt will have on her ability to buy a home, start a family, or add to her savings account.
Ms Body is one of as many as 3 million people who will see a big increase in the from 1 June.
The rate of will rise from 3.9 per cent to 7.1 per cent, meaning the average debt is projected to increase by $1,700.
The Higher Education Loan Program (HELP) – previously the Higher Education Contribution Scheme (HECS) - is tied to , increasing proportionately in line with the consumer price index (CPI) which .
It's the highest indexation rate since 1990.
.jpg?imwidth=1280)
Student debts increased by 7.1 per cent on Thursday. Source: AAP / Dean Lewins
Ms Body graduated with a bachelor's degree, and then a Masters of Business. She currently sitting on $78,000 of debt.
At the new rate, her debt will go up by $5,538 in a year, to $83,538.
"It's not fun, I thought this would be my time to start making some significant payments but that's just not going to happen," she said.
"I've gotten my master's business to get a higher paying job. But I've only been earning at that high level for six months of this financial year. I only actually pay off about $1,500 of my debt (in the financial year), and then it's going to rise by so much more."
Ms Body is the general manager of Think Forward which advocates for intergenerational fairness issues to be central in Australian politics.
"I think the thing that's the most frustrating about it is that there are better ways to do this," she said. "Clearly, you know, the policies put in 30 years ago, aren't working anymore, so we need to change them."
Indexing student loans to wages growth rather than inflation could be a fairer system that would match the value of different degrees, she said.
The total value of HECS loans will increase by $4.5 billion when the new indexation rate comes in.
Crossbench MPs including Greens deputy leader Mehreen Faruqi, Mackellar MP Sophie Scamps, North Sydney’s Kylea Tink, and Indi independent Helen Haines wrote to Mr Clare and Prime Minister Anthony Albanese on Monday.
The group asked the government to intervene immediately to stop the indexation, offering to support urgent legislation.
“Indexation is causing student debts to increase faster than they are being paid off,” the letter said.
“Larger debts take much longer to pay off, with student debt becoming a lifelong burden for too many. The growth of student debt disproportionately impacts young people and women, entrenching inequality.
Senator Lidia Thorpe and Tammy Tyrrell, Tasmanian independent Andrew Wilkie, and Fowler MP Dai Le are among the signatories to the letter.
Senator Faruqi said the government had not assisted graduates who are already facing tougher cost of living price rises.
“The government can’t just shrug their shoulders and allow millions of Australians to be swept away by a student debt avalanche. There is still time to step in and stop this,” she said.
The National Union of Students has argued that the indexation rise is unfair and says the government is expected to receive $2.5 billion from students and graduates this year.
“We are already looking at becoming the most indebted generation in Australia's history and now the Federal Government is looking to profit from young Australians during a cost of living crisis,” NUS National President Bailey Riley said.
“It is unacceptable that the Government will make more profit this year off of the student loan system than they will from their changes to the Petroleum Resources Rent Tax
(PRRT),” Ms Riley said.
On Wednesday, Education Minister Jason Clare told parliament the Universities Accord, due to report in December, would consider education affordability.
He said HECS had made it possible for millions of Australians to get a university degree and change their lives through education.
- With the Australian Associated Press.
