Young Australians continue to grapple with substantial student debt, despite Labor’s recent proposal to reduce HECS debts by 20%. Presented by Education Minister Jason Clare, this legislation marks the re-elected Albanese government’s first parliamentary action.
The proposed changes aim to alleviate the financial burden on approximately three million Australians, decreasing the average HECS debt of $27,600 by about $5,500. Additionally, the bill will raise the threshold for mandatory HECS repayments from $54,435 to $67,000 while also lowering minimum repayment amounts. Clare described the reforms as significant for many young people, stating they would alleviate some of the financial pressure faced by graduates starting their careers.
Recent graduate Julia Wilding from Western Australia completed her optometry degree in 2023, only to find herself with a staggering HECS debt of $130,000. Despite the proposed $26,000 reduction, she described the decrease as just “a drop in the ocean,” estimating it would take her around 30 years to pay off her loans, taking into account annual interest adjustments. Wilding expressed her love for her profession but lamented the overwhelming financial reality she faces.
Another individual, a Sydney resident named Katie, holds a HECS debt of roughly $110,000 following her studies in diverse fields including arts and publishing. She anticipates being in her 80s before she fully repays her loans. While she welcomed any debt reduction, she argued for the complete removal of HECS debts, suggesting it was ironic that many individuals arguing against such measures have benefitted from free education.
Katie proposed several strategies the government could adopt to ease the burden on students, such as reintroducing government co-payments for voluntary contributions or making additional payments tax deductible. She, along with many others, expressed frustration over the current system that adds yearly indexation to outstanding debts before repayments are processed.
Senator David Pocock echoed these sentiments, calling for reform to the indexation process, which he described as unjust. He asserted that those with HECS debts should not be charged interest on repayments that have already been made to the ATO.
The federal government has initiated a comprehensive review of Australia’s university system known as the Universities Accord, with its results released in February 2024. Clare noted that the government is beginning to implement some of the report’s recommendations, including introducing student payments for practical work placements, and emphasized the need for further reforms to enhance equity in higher education funding, particularly for disadvantaged groups and regional students.