The government finally did something about those brutal HECS increases – here’s what’s happening with your student debt.
Remember when your HECS debt jumped by over 7% in 2023? Yeah, that sucked. Well, the government has actually listened for once and made some changes that’ll put money back in your pocket.
What’s Actually Changed?
The way your student loan gets indexed each year has been completely overhauled. Instead of just using the Consumer Price Index (CPI) – which went mental during the cost of living crisis – your debt will now increase by whichever is lower: CPI or the Wage Price Index (WPI).
Think of it this way: if prices are going up faster than wages (like they have been), your debt will only increase in line with wage growth instead of getting hammered by inflation. It’s actually pretty sensible policy for once.
The Money You’re Getting Back
Here’s where it gets good. The government has backdated these changes to June 2023, which means:
- 2023 indexation: Dropped from a brutal 7.1% down to 3.2%
- 2024 indexation: Reduced from 4.7% to 4%
If you had any HECS-HELP debt during these periods, you’re getting money credited back to your account. This applies to all the different loan types – HELP, VET Student Loans, Australian Apprenticeship Support Loans, the whole lot.
What You Need to Do (Spoiler: Nothing)
This is the rare government process where you literally don’t need to lift a finger. They’re automatically processing all the credits and working through everyone’s accounts. If they have your mobile number, you’ll get an SMS when your account has been sorted.
The calculations aren’t just simple either – they’re accounting for the compounding effect across both years, so you’re getting back every dollar you’re owed.
If You’ve Already Paid Off Your Loan
Plot twist: if you managed to pay off your student debt completely, you might actually get a refund deposited into your bank account. How good is that? Finally, being responsible with your finances pays off.
But there’s a catch (because there’s always a catch). If you owe money elsewhere to the government – like a tax debt or Centrelink overpayment – they might use your refund to pay that off first. Still, debt is debt, so it’s not necessarily a bad thing.
Getting Your Refund
The refund process works a bit differently. Once they’ve processed your credit, it’ll show up as a debit on your Income Tax account first, then get transferred to your bank account. How long this takes depends on your bank’s processing times, so don’t panic if it doesn’t appear immediately.
Important bit: Make sure your bank details are up to date with the ATO. If you use a tax agent, double-check that the nominated account is actually yours and not sitting in some random business account. You can update your details online through myGov or contact your tax agent.
The Bigger Picture
This change isn’t just about getting some money back – it’s about making the system fairer going forward. Student debt shouldn’t grow faster than your ability to pay it off, which is exactly what was happening when indexation was tied purely to inflation.
The new system means your debt will still grow each year (unfortunately), but it won’t outpace wage growth. It’s a much more sustainable approach that recognizes student loans should help people get ahead, not keep them underwater.
Timeline and What’s Next
The government is working through accounts as quickly as possible, but some are more complex than others. If you’ve got multiple loan types or made payments during the affected periods, your calculation might take a bit longer.
Keep an eye on your myGov account and your phone for that SMS notification. Most people should see their credits processed over the coming months.
Bottom Line
This is genuinely good news for anyone with student debt. You’re getting money back, future indexation will be more reasonable, and you didn’t have to fill out a single form to make it happen.
Finally, a government policy that actually helps people instead of making everything more complicated. Check your accounts, update your bank details, and enjoy getting some of your hard-earned money back.
