HECS/HELP debt will rise by 7.1% on 1 June this year, the highest indexation rate seen in 32 years. 

While the ATO is yet to formally release the indexation figures for 2023, quarterly inflation data for March was 7% insinuating a rise in uni debts was inevitable. 

Australia’s overall student debt will increase from $74 billion to just under $80 billion. 

Greens Senator and Spokesperson Mehreen Faruqi said linking student debt to inflation was making life harder for young Aussies.

“Student debt is rising faster than it can be paid off,” Ms Faruqi said.

Indexation on student debt has spiked over the past three years, starting at 0.6% in 2021 and 3.9% in 2022. 

According to a report by Futurity Investment Group, the average HECS/HELP balance is $22,636.

If you take last year’s indexation rate of 3.9% on an average debt of $22,636, approximately $880 was added on top of what was already owed.

This year, a person with an average-sized debt would expect to see $1,600 added to their loan if it was indexed at 7.1%.

Those with a $30,000 debt could see $2,100 added to their loan, while Aussies with a $40,000 balance could face upwards of $2,800 added.

@savings.com.au Pay off your HECS HELP uni debt or not?? #ausfinance #financialfreedom #financetips #financialplanning #inflation #australianeconomy #universitydebt ♬ original sound - Savings.com.au

Getting on top of original amount owed becoming harder

If inflation remains stubbornly high, some Aussies may find it tough to clear their debt.

For example, if someone earns $70,000 and has a HECS debt of $22,636, each year, they’d need to pay off 3.5% of their income, or $2,450.

However, indexation of 7.1% would add $1,600. So, they are only reducing their debt by $850 per year.

It's also highly possible that someone won't pay off any of the original principal if they have a higher debt and a lower income.

Read More: Pay off HECS/HELP debt before indexation?

Advertisement

Need somewhere to store cash and earn interest? The table below features savings accounts with some of the highest interest rates on the market.

Rates
Features
Conditions
Other
Provider
4000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details
  • Bonus rate for the first 4 months from account opening
  • No account keeping fees
  • No minimum balance

High Interest Savings Account (< $250k)

  • Bonus rate for the first 4 months from account opening
  • No account keeping fees
  • No minimum balance
More details
000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details
*Rate varies on savings amount
  • Deposit $500 per month to get bonus interest
  • 5.50% p.a. available on total savings up to $100k.
  • 5.00% p.a. applies to savings between $100k-250K.
  • Tiered bonus rates apply. (TMDs at ubank.com.au)
*Rate varies on savings amount

Save Account (<$100,000)

  • Deposit $500 per month to get bonus interest
  • 5.50% p.a. available on total savings up to $100k.
  • 5.00% p.a. applies to savings between $100k-250K.
  • Tiered bonus rates apply. (TMDs at ubank.com.au)
More details
4000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details
  • A high-interest online savings account with no monthly fees, easy withdrawals and award-winning digital banking
  • No withdrawal notice periods or interest rate penalties
  • Save up to 10% on eGift cards at over 50 retailers with Macquarie Marketplace

Savings Account (Amounts < $250k)

  • A high-interest online savings account with no monthly fees, easy withdrawals and award-winning digital banking
  • No withdrawal notice periods or interest rate penalties
  • Save up to 10% on eGift cards at over 50 retailers with Macquarie Marketplace
More details
4000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details
  • For deposit amounts $0 - $49,999
  • New ING personal savings customers receive an introductory bonus 0.50% p.a. variable kick starter rate for the first 4 months on balances up to $500,000.
  • Reverts to variable ongoing rate. T&Cs apply.

Savings Accelerator (Amounts < $50000)

  • For deposit amounts $0 - $49,999
  • New ING personal savings customers receive an introductory bonus 0.50% p.a. variable kick starter rate for the first 4 months on balances up to $500,000.
  • Reverts to variable ongoing rate. T&Cs apply.
More details
Important Information and Comparison Rate Warning

All products with a link to a product provider’s website have a commercial marketing relationship between us and these providers. These products may appear prominently and first within the search tables regardless of their attributes and may include products marked as promoted, featured or sponsored. The link to a product provider’s website will allow you to get more information or apply for the product. By de-selecting “Show online partners only” additional non-commercialised products may be displayed and re-sorted at the top of the table. For more information on how we’ve selected these “Sponsored”, “Featured” and “Promoted” products, the products we compare, how we make money, and other important information about our service, please click here. Rates correct as of August 21, 2024. View disclaimer.

Important Information and Comparison Rate Warning

Image by Joshua Hoehne via Unsplash