A HECS loan (also known as HECS-HELP) is available to students to pay the student contribution amount in a Commonwealth Supported Place (CSP) at a university or higher education provider.
There is no interest charged on the loan, however the loan is indexed (adjusted) on 1 June each year to reflect the change in cost of living.
Until yesterday, the indexation was based on the CPI (Consumer Price Index) and historically had been low. The significant increase in inflation in FY23 and FY24 led to higher than expected indexation rates – 7.1% and 4.7% respectively.
The Universities Accord (Student Support and Other Measures) Bill 2024 was passed in parliament yesterday (26/11/2024) which brings 2 key changes:
- The Indexation rate will be capped at the lower of either the Consumer Price Index (CPI) or the Wage Price Index (WPI).
- The change will be backdated to 1 June 2023. This means that the Indexation rate at 1 June 2023 will reduce from 7.1% to 3.2% and 1 June 2024 will reduce from 4.7% to 4%.
The ATO will automatically apply the changes to student loans.
If you have completely repaid your HECS loan post the 2023 or 2024 indexation - the amount will be refunded to your bank account (providing you have no other outstanding government debts)
Further information on HECS-HELP loans can be found on the Australian Government Study Assist:
https://www.studyassist.gov.au/financial-and-study-support/hecs-help