Millions of Australians with student loans will have hundreds of dollars wiped from their HECS debts as the federal government's cost-of-living relief in the upcoming budget. The move is part of indexation changes that are being back dated to counter last year's record rise.
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00:00 Across Australia, almost 3 million people owe $78 billion in student loans.
00:07 And as cost of living pressures have continued to hit hard, calls for HECS debt relief have
00:12 grown louder and louder.
00:14 Every year, HECS debts rise with inflation in a process known as indexation.
00:19 Last year's mammoth slug of 7.1% was the second highest on record.
00:25 This left people like teacher Georgina Routley so frustrated by their rising debts that they're
00:30 reconsidering the value of university.
00:33 I know for my teenage children who are starting to think about what careers they might have,
00:40 university isn't necessarily an option they're considering because they are aware of the
00:44 debts that they will incur and it is a disincentive from going down that path.
00:49 Now the Education Minister Jason Clare and the government are promising large indexation
00:54 rises will never happen again.
00:56 It's accepting a recommendation from a recent wide-ranging review of universities to make
01:01 HECS simpler and fairer.
01:04 Indexation will now be calculated on either the Consumer Price Index or the Wage Price
01:08 Index, whichever is lower, and it will be backdated to last year to cancel some of the
01:13 pain from that big rise.
01:15 Will mean that their HECS debt is cut.
01:18 If you've got a HECS debt of say $26,000, which is the average across Australia, it
01:23 means that your HECS debt will be cut by about $1,200.
01:29 Right across the country it means that we're wiping about $3 billion of HECS debt for more
01:35 than 3 million Australians.
01:37 Why have you decided to act now?
01:38 Well I think the hike in HECS debt last year hit a lot of Aussies hard, particularly a
01:44 lot of young Australians.
01:46 And they've made their voice heard.
01:47 I heard it, the government heard it.
01:50 We've listened and we're responding.
01:52 And that's why we've acted to not just change this, but to backdate it.
01:57 Make sure that we wipe out what happened last year and put in law the things that we need
02:02 to put in law to make sure that it never happens again.
02:05 And the court also recommended changes to the way banks consider people's HECS debts
02:10 and to the timing of indexation.
02:12 Have you taken a position on those recommendations?
02:14 We've written to the banks, we've written to the ABA, asking them for advice on that.
02:19 This one, as you say, of a bunch of recommendations in the accord, about 47 recommendations all
02:25 up.
02:26 It's a big report.
02:27 And it sets out a plan for how we reform higher education for the next decade and beyond.
02:33 It's bigger than one budget, but we've got to start the work right now.
02:37 And you'll see the first stage of our response to the accord in the budget on budget night.
02:42 The government's HECS changes will require legislation to become law.
02:46 [BLANK_AUDIO]