The prime minister, Anthony Albanese, has suggested the government is looking to reduce the rate of student debt indexation in response to debts growing by more than 4% this year.
Albanese said on Thursday that “there’s a range of areas we need to do much better for the younger generation and Hecs is one of them” and that announcements would be made “pretty soon” on changes to make the student loan “simpler and fairer”.
Higher Education Contribution Scheme (Hecs) debts, now known as Higher Education Loan Program (Help), are broadly indexed to inflation, which resulted in an eye-watering 7.1% increase in the amount of debts last year.
According to parliamentary library research for the Greens, released on Thursday, debts will rise in June by between 4.2% and 4.8%. For a student with an average debt of $26,494, their loan will grow by between $1,113 and $1,272.
The Universities Accord final report, made public earlier this year, recommended the commonwealth ensure loans didn’t outpace wage growth by setting the indexation rate to whatever was lower out of consumer price index and the wage price index.
Monique Ryan, an independent MP has collected more than 260,000 signatures on a petition calling for that reform, citing instances of students whose loans are growing faster than they are making repayments.
She is among a coalition of crossbenchers, including independents Zoe Daniel, David Pocock, Allegra Spender and Kylea Tink, who have backed reforms.
On Thursday, Pocock posted to X that the accord “couldn’t be clearer”, adding the burden of student indexation needed to be fixed before 1 June.
The accord also recommended reducing student contribution amounts for low-income earners and changing the timing of indexation to deduct compulsory repayments first.
Asked about the next scheduled Hecs increase and whether it was unfair to the younger generation, Albanese told Hit FM on Thursday: “I think there’s a range of areas where we need to do much better with the younger generation, basically, and Hecs is one of them.”
Albanese noted that indexation of debts had “been in place for some time”.
“What we’ve done, we’re developing a Universities Accord, with all the universities across the board, and what that has said is the system can be made simpler and fairer,” he said.
“The idea of Hecs is a good one, it is one that has led to a massive expansion in the number of people being able to do university degrees.
“But we’re examining the recommendations and we’ll be making announcements pretty soon on that – we of course have a budget coming up.”
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In February the education minister, Jason Clare, told ABC’s Afternoon Briefing the accord’s recommendation to change the way Hecs/Help was repaid would provide “immediate cost-of-living benefit” for people on lower incomes.
In November 2022 the Greens introduced a private senator’s bill to abolish indexation of Help debts, and raise and index the minimum income threshold for repayments, now $51,550.
In April 2023 a Senate committee, chaired by Labor’s Tony Sheldon, recommended the bill not be passed. It said removing indexation “will not ease the cost of living … in the short-term, given that an individual’s repayments are calculated based on [their] income, rather than the total amount of the loan”.
According to the parliamentary library modelling, student debt will rise by around $12bn under Labor’s term unless the federal government scraps indexation on loans in the upcoming budget.
For students at the highest end of the spectrum, with debts of about $100,000, their loans would rise by between $4,200 and $4,800 unless Labor intervenes to reform how Hecs/Help is indexed. Since 1 June 2022, debts for this bracket would have risen by more than $15,000.
The deputy Greens leader and spokesperson for education, Senator Mehreen Faruqi, accused the government of talking about the cost of living crisis while ignoring the “heavy burden” of student debt.
“In the May budget, Labor must scrap indexation on student debt,” she said on Thursday.
“Labor refused demands from the Greens to protect students from huge debt increases last year, but there is still time to stop the massive indexation hit coming again this June.”