The 7.1% increase marks the highest indexation rate for HECS/HELP debt in 32 years - courtesy of high inflation. 

HECS/HELP indexation is not a new phenomenon, with debts increased each year to remain in line with the inflation rate. 

However what remains different in 2023 is the seismic jump in overall inflation rate, therefore impacting how much more Aussies will be required to pay on top of their existing student debts. 

To put the increase into perspective, HECS/HELP indexation in 2022 was 3.9%, with a rate of 0.6% in 2021. 

@savings.com.au Are you a student or graduate with an existing HECS or HELP debt? Indexation takes place today, June 1, which means on top of existing debts, you will be required to pay an additional 7.1% 🤕 Head to savings.com.au to find out more #fintok #fintokaustralia #ausfinance #savingscomau #moneytok #studentdebt #debt #moneytok #university #indexation #inflation #fyp ♬ original sound - Savings.com.au

Two Red Shoes Mortgage Broker Brett Sutton said a student with a $50,000 student loan will be hit with an additional $3,500 on their government debt.

“If a client is earning $85,000 a year, they will be repaying this debt at $90 per week,” Mr Sutton said.

“Of that only $1,180 will pay down the debt in that 12-month period.”

Futurity Investment Group’s University Debt Report revealed 1,487,351 Australians currently have a HECS/HELP debt of more than $20,000, while 293,201 currently have a HECS/HELP debt of more than $50,000.

Further, 1,561,656 Australians with HECS/HELP debt are yet to make any repayments, with the average time to fully repay HECS/HELP debt is now 9.5 years.

How much will you be required to repay in 2022-23?

As a general rule of thumb, the more you earn, the higher your HECS/HELP repayments will be. 

That said, say you gained an inheritance or won the lottery and want to further eliminate your HECS/HELP debt - you can do so at any time through voluntary repayments made to the Australian Taxation Office. 

For the 2022-23 financial year, the repayment threshold kicks off at $48,361, meaning those who earn above this amount in a financial year will be required to start repaying their HECS/HELP debt.

2022-23 Repayment Threshold

Repayment rate (%)

Below $48,361

N/A

$48,361 - $55,836

1.0%

$55,837 - $59,186

2.0%

$59,187 - $62,738

2.5%

$62,739 - $66,502

3.0%

$66,503 - $70,492

3.5%

$70,493 - $74,722

4.0%

$74,723 - $79,206

4.5%

$79,207 - $83,958

5.0%

$83,959 - $88,996

5.5%

$88,997 - $94,336

6.0%

$94,337 - $99,996

6.5%

$99,997 - $105,996

7.0%

$105,997 - $112,355

7.5%

$112,356 - $119,097

8.0%

$119,098 - $126,243

8.5%

$126,244 - $133,818

9.0%

$133,819 - $141,847

9.5%

$141,848 and above

10.0%

Futurity Investment Group’s University Debt Report revealed the annual average gross income across 1,000 Australian survey respondents currently sits at $80,580.

This means an Aussie earning $80,580 will be required to dedicate 5% of their income to repaying HECS/HELP debt this financial year, or $4,029.

If they had a debt of $50,000, it would grow by $3,550 due to indexation, meaning the average Aussie would barely chip away at their principal debt over the year.

First published on June 2023

Image by Maria Teneva via Unsplash