HECS-HELP $3 billion budget relief welcomed but debtors hope for further action
School teacher Georgina Routley has called for a HECS freeze for women who leave the workforce to have children. (ABC News: Morgan Timms)
The HECS debt cost-of-living crisis is getting serious when a high school teacher joins the swelling ranks questioning the value of a university degree.
Teacher Georgina Routley, 48, has a $26,000 HECS debt – right on the average.
“I know for my teenage children who are starting to think about what careers they might have, university isn’t necessarily an option they’re considering because they are aware of the debts they will incur and it is a disincentive from going down that path,” Ms Routley said.
After studying teaching, she watched her debt climb as she took seven years out of the workforce to have children.
“It’s frustrating to be working really, really hard as a part-time employee and working mum and not seeing much headway made on that debt — and I know that’s the same story for a lot of teachers, particularly female teachers,” she told the ABC last year.
One year later, she was thrilled when told by ABC News of indexation changes.
Every June HECS debts are indexed and bumped up a few percentage points to make sure the amount owed keeps up with inflation.
For almost 35 years indexation has been calculated based on the Consumer Price Index (CPI), which is now at historic highs.
Last year’s 7.1 per cent increase was the largest hike since 1990, leaving some in a debt spiral with loans increasing faster than they could be repaid.
Annual HECS indexation will now be calculated on whichever figure is lower out of CPI and the Wage Price Index (WPI).
The policy will be backdated to June 1 2023, which means last year’s 7.1 per cent indexation will be lowered to the WPI of 3.2 per cent.
Students who have repaid their debt will receive a tax credit from the Australian Tax Office (ATO).
“I think it’s great that they’re rolling it back. I think its great that they’re now paying attention to the fact HECS is so problematic,” Ms Routley said.
“The short-term relief will make a difference. It’ll reduce my balance owed by $1200 which is fantastic.”
However, Ms Routley still wants the government to take more action to help women who take time out of the workforce for caring responsibilities only to see their debt climb.
“Freezing HECS debts for women, or anyone, who’s out of the workforce so if you’re not earning money, your HECS debt shouldn’t be growing because that just creates a more unsurmountable barrier when you do return to the workplace,” she said.
“I’m waiting with bated breath to see what the budget has in store.”
Minister hints at another relief in the budget
The government’s indexation changes were recommended by a sweeping review of higher education called the Australian Universities Accord.
As well as indexation reform it called for changes in the way banks consider HECS loans so Australia’s three million student debtors aren’t prevented from obtaining a mortgage.
“We’ve written to the banks, we’ve written to the Australian Banking Association (ABA) asking them for advice on that … you’ll see the first stage of our response to the accord in the budget on budget night,” Education Minister Jason Clare said.
Mr Clare also acknowledged the strength of the community reaction to last year’s 7.1per cent indexation increase.
“I think the hike in HECS debt last year hit a lot of Aussies hard, particularly a lot of young Australians and they’ve made their voice heard. I heard it. The government heard it,” Mr Clare said.
“We’ve listened and we’re responding and that’s why we’ve acted to not just change this but to backdate it and make sure we wipe out what happened last year.”
The government’s HECS changes will require legislation to be passed by both houses of parliament after the budget.
Greens Deputy-Leader Senator Mehreen Faruqi is calling for indexation to be scrapped altogether and a lift in the rate when repayments are required (currently $51,000).
“Labor has clearly felt the pressure of a massive and sustained community and Greens campaign and been forced to move but it’s the bare minimum and it’s not cost-of-living relief,” Ms Faruqi said.
The government will need to legislate its HECS changes after the budget and Ms Faruqi suggested the Greens could make support conditional on the government going further.
“What Labor has announced is better than nothing but it is not at all good enough. We will look at Labor’s legislation and push for it to be better,” she said.
Shadow Education Minister Senator Sarah Henderson said student debt would still increase significantly during Labor’s term in government.
“Under the Coalition’s strong economic management, low inflation meant indexation averaged just 1.7 per cent per annum,” she said.
”Whether it’s student debt, housing or paying the bills, young Australians continue to suffer acute cost-of-living pain under this incompetent Labor government.”
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