How the HECS debt rise is part of a bigger, broken promise.

Just in case you weren't aware, HECS/HELP debts are going to increase by 7 per cent in the next month. 

That means if you are one of the more than half a million people with a student debt of $40,000, another $2840 is going to be added to the bill. 

Why is this happening? Yeah, great question. 

While you're not charged interest on HECS/HELP debts, the full amount is indexed to inflation and every year on June 1, that chunk is added onto the total. 

It happens every year and the actual percentage of indexation is calculated through a fairly convoluted process of analysing the consumer price index (CPI), which is basically a measure of how the price of goods and services change over time i.e. inflation. 

Okay, baby economics aside, we need to talk about what's happening this year. 

This June, we're going to see the highest increase to student debt since 1990. 

For those still paying off our tertiary education (and there are around three million of us), we're going to see a 7.1 per cent increase to our HECS/HELP debts. 

That equates to an extra five to six billion dollars that the federal government is adding to our collective debt. 

It's hardly surprising that, given that so many Australians are struggling in the midst of a cost-of-living crisis, this extremely large addition to the nation's student debt, has pissed a lot of people off. 


The National Union of Students has been advocating for the indexation to be frozen while inflation is so elevated, saying that it is "outrageous that during a cost-of-living crisis the Australian Government would profit billions of dollars off of student debt". 

The Greens are also backing the push for an indexation pause, with Greens Senator Mehreen Faruqi referring to the additional debt as a "devastating blow" and noting that nurses, teachers, and other essential workers will face the "double whammy of low wages and ballooning student debt." 

Independent Zoe Daniel has also urged the government to reform the indexation system and suggested tying indexation to basically... anything but the CPI. Daniel pointed out that women are disproportionately affected by rising university costs and the "current indexation system further exacerbates the gender pay gap." 

She also said that the HECS/HELP debt system "is no longer fit for purpose and is overdue for an independent review". 

Listen to The Quicky explain how HECS debt can impact getting a mortgage below. Article continues after podcast. 

However, so far the government has seemed fairly unperturbed by the massive, wild chorus of criticism. When Treasurer, Jim Chalmers, was asked if young people have any hope of paying off their student debts, he simply replied that "of course they do". 

The HECS/HELP system was introduced back in 1989 as a fair system to give all Australians access to a tertiary education and then pay off student debt according to earnings. And yet, the leap in indexation this year has also highlighted other wildly concerning issues with the way that it is functioning. There's been growing concern about the fact that the debt we're being left with after university has been sticking around in our lives for longer than ever before.  


Back in 2006, only 50 per cent of people owed more than $10,000 in HECS/HELP debt. As of last year, 72 per cent of us owe more than that. 

I am 30 years old and after a bachelor's and master's degree, I'm sitting on about $45,000 in HECS/HELP debt that hasn't significantly shifted in the past three years due to working arrangements. Like so many other Australians, I took on that debt with the understanding that there would be some net benefit in how much I am able to earn and the quality of life that I was promised as a result. 

And maybe in another universe, it would be fine. Assuming we weren't in the thick of a cost-of-living and wage stagnation crisis, it could have been okay. In that scenario, the percentage of income lost to paying the government back would be felt but maybe to not such a devastating extent. The extra $3000 being dumped on my debt wouldn't have felt so infuriating. 

But we don't live in that universe. 

Watch this clip from What the Finance below. Article continues after video. 

Video via Mamamia 

We live in the universe where young people are giving up in droves on ever owning their own homes because tax cuts for investment properties are prioritised above them (HECS/HELP debt is also another clear barrier to securing a mortgage when banks hold that debt against you). Where the current cost-of-living crisis is making it difficult for half a million Australians to put food on their table. Where we're heading for broad economic and societal collapse because we won't stop burning fossil fuels and women my age are being forced to rethink ever having children because of it. 

In this universe, $3000 feels like adding injury to injury (and I accept that I am one of the lucky ones – many people will see much, much more than this added to their bill). 

It feels like yet another form of absurd intergenerational inequality. And that should matter to all of us – no matter what age you are or the numbers that you see when you log into your ATO account. 

It should matter because the promises we made for young people's futures are being broken and this is unavoidably a part of that. 

Elfy is the editor of Mamamia. You can find her on Instagram and Twitter

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