Millions of Australians given debt relief as HECS cuts roll in

Millions of Australians still paying off a student loan have enjoyed some cash relief as the Labor government debt cuts roll in today.

The federal government has wiped $3 billion in HECS-HELP debt from Australian student debt loans after announcing changes to how indexation is applied.

It means former students with an average HECS debt of $27,000 will have about $1200 added as a credit to their outstanding loan.

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The indexation change was backdated to June 2023 and those who paid off their HECS debt in 2023 or 2024 after indexation was applied will receive the credit as a refund in their bank accounts.

Legislation passed the Senate last month to change how annual indexation on student debts are calculated in Australia.

Previously, it was based on the Consumer Price Index, which caused loans to surge by 7.1 per cent last year. 

Now, it will be determined by what is lower of the CPI or the Wage Price Index.

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"The Universities Accord recommended indexing HELP loans to whatever is lower out of CPI and WPI. We have done this, and gone further," Minister for Education Jason Clare said.

"We have backdated this reform to last year. This wipes out what happened last year and makes sure it never happens again."

Australians with a student debt loan can log onto their Australian Tax Office (ATO) account via MyGov to check the debt reduction.

The Albanese government has vowed even bigger changes to student debt if Labor wins the upcoming federal election.

Labor has vowed to cut HECS debt by a further 20 per cent.

Under the plan, a graduate with an average HELP debt of $27,600 will see around $5520 wiped from their outstanding loan.

It will also apply to the Vet Student Loan, Australian Apprenticeship Support Loan and other income-contingent student loans.

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