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Earlier this year, the government announced it would provide some relief to young people paying off HECS debts, by refunding a certain amount for inflation. Since May, we have been patiently waiting for these refunds to actually hit our HECS balances—and, we’re pleased to say, they are finally happening.
But how much will you receive? Headlines have been quick to point out the changes to the HECS scheme will result in $3 billion in savings across our collective HECS schedule. But in times like these, you’re probably wondering just how much your bank account will relish this much-needed assistance—if at all. Here, we dive into the changes, what they mean and exactly how much you can expect off your debt.
The Changes To HECS Debt, Explained
Labor announced it would adopt recommendations made by the government’s review into higher education, to cap indexation at the Consumer Price Index (which it currently uses) or the Wage Price Index – whichever is lower. Hoorah! Each financial year, HECS debts increase based on this indexation figure. Last year, you may remember the outcry after it was revealed HECS debts would receive a 7.1% hike – the largest since 1990. Now, the government will retroactively reduce that 7.1% to 3.2% – meaning you’ll get a little relief off your HECS amount. It will also reduce the amount of indexation for 2024 from 4.7% to 4%.
While the proposal was announced in May, it officially passed through parliament in November 2024.
If you’re wondering if you’ll receive money back, the answer is ‘sort of’. You won’t receive money in your bank account, but it will shave a little off your owed debt. What you will get is an ‘indexation credit’, meaning your outstanding loan will be reduced.
How Much Will I Save On My HECS Debt?
According to the ABC, the average HECS Debt in Australia is $26,494. Based on this amount, a person would receive a $1200 rebate to their HECS. Here’s a rough guide to help you figure it out. Here’s what you’ll get back based on your HECS debt balance.
- $15,000 (debt) = $675 (credit)
- $25,000 = $1,120
- $30,000 = $1,345
- $35,000 = $1,570
- $40,000 = $1,795
- $45,000 = $2,020
- $50,000 = $2,245
- $60,000 = $2,690
- $100,000 = $4,485
- $130,000 = $5,835
Even better, you can enter your precise debt into the government’s Indexation Credit Estimator, and get the exact amount. These changes may not radically improve a $500,000 HECS debt, but it is an ongoing light at the end of the tunnel for students who find themselves drowning in debt.
When Will We Received Our HECS ‘Refunds’?
As discussed, the ‘refunds’ are not exactly refunds (unless you paid off your debt in full after June 1, 2023—in which case, you’ll receive a partial refund into your nominated account). However, the reduction of your HECS balance will happen “as soon as possible”. “Now that legislation has passed, the ATO will automatically apply these credits as soon as possible,” Education Minister Jason Clare said, without giving a specific date.
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The post The HECS Debt Refunds Are Finally Happening appeared first on ELLE.