On 1 June your HECS-HELP debt is going to get bigger
That’s because the Higher Education Loan Program (HELP) (previously known as HECS), is tied to inflation, which has been surging over the past few months.
Study and training loan indexation rates
On 1 June each year, indexation is applied to the part of an accumulated study and training loan that has remained unpaid for more than 11 months, for:
- Higher Education Loan Program (HELP)
- VET Student Loan (VSL)
- Student Financial Supplement Scheme (SFSS)
- Student Start-up Loan (SSL)
- ABSTUDY Student Start-up Loan (ABSTUDY SSL)
- Trade Support Loan (TSL).
Indexation maintains the real value of the loan by adjusting it in line with changes in the cost of living as measured by the consumer price index (CPI). The indexation figure is calculated each year after the March CPI is released. It is based on financial figures collected by the Australian Bureau of Statistics over the previous 2 years.
The ATO’stable shows the indexation rate applied to all study and training loans:
Why such a significant change?
Because HELP debt is an interest-free loan courtesy of the Federal Government, it’s often considered the least urgent debt to pay off compared to credit cards or home loans that accrue interest.
Former students typically pay off their loans gradually through compulsory repayments that kick in once they start earning more than $46,620 a year, with the repayment rate increasing each time you get a pay rise.
However, the latest updates shift this narrative.
Whilst HELP debt is sometimes referred to as ‘good debt’ as it can lead to a much higher income throughout your life, having debt is not desirable and paying it off early can help you achieve your financial goals.
Does that mean a rethink about how you manage your HECS / HELP repayments? Speak with Carrick Aland’s tax team this tax time about your options BEFORE 30 June on 07 4669 9800.