Jill & Paul chat with their nephew about the trouble with HECS
A recent clan get-together resulted in a very topical conversation centered around HECS/HELP and the impacts that this educational burden has on our younger family members. One nephew and his wife - both professionals with double degrees – spoke at length about the challenges they are facing as a newly married couple in this cycle of ever growing costs. Home loan interest rate increases, the escalation of general living expenses and rises to CPI are, whilst still manageable, impacting on many of the decisions and lifestyle choices that they are now making. Should they pay down debt? Keep a nest egg buffer in an offset account? Delay planning a family? And then of course there is the ongoing commitment to repay higher education costs. Compulsory repayments, indexed to CPI, saw the indexation rate move from 3.9% in 2022 to an eye watering 7.1% in 2023, with the 2024 figures not due until late in April. With 2.95 million Aussies holding education debts (the combined total being over 78 billion dollars), HECS/HELP contributed $4.9 billion in repayments in the 2022-23 tax year, more than twice the amount of Petroleum Resource Rent Tax (PRRT) obtained from fossil fuel companies.
Thankfully, a light has now been shone on this worsening inequality gap, starting with the Australian Institute’s NPC address in January this year. Community Independent Dr Monique Ryan, backed by fellow independents Zali Steggall, Zoe Daniel and Kylea Tink, has implemented a petition seeking change in the indexation process (see https://www.change.org/p/make-our-hecs-debts-easier-to-pay-off ) which has attracted over 245K signatures in just 4 weeks. Former Treasury Secretary Dr Ken Henry has also highlighted the unfairness of our current system and is encouraging young Australians to demand change. You can listen to his recent ABC RN podcast at https://www.abc.net.au/listen/programs/radionational-breakfast/ken-henry/103684052
All Aussie families impacted by this educational cost encumbrance would both welcome and benefit from meaningful changes to the system. It will be interesting to see how things progress as we head towards the next Federal election.