Millions of debt-strapped young Aussies are battling with cost of living increases amid rising university fees.
From June 1, almost three million students were slugged a payment increase on their student loans.
The indexation rate applied to HECS–HELP loans jumped to 3.9 per cent, the highest in a decade.
Last year, the rate was just 0.6 per cent.
It means the average HELP debt is $23,685 based on Australian Taxation Office 2020-21 data, suggesting the average debt jumped about $923.
National Union of Students president Georgie Beatty said the impact of the indexation increase “can’t be underrated”.
Ms Beatty said this, added to higher cost of living expenses, rising rents and changes to funding arrangements for some courses, meant financial hardship was at an “incredible high” for students.
Under the former Morrison government’s university funding reforms, student fees have risen for a range of courses, while being slashed for science, maths, nursing and teaching degrees in an effort to lure students into study areas more likely to get them jobs.
Under the changes, average fees for full-time humanities courses have risen 113 per cent, from $6804 up to $14,500.
Fees for law and commerce also jumped 28 per cent to $14,500 a year, up from $11,355.
It means a full-time student in these courses would now pay about $43,500 for their degree after the government cuts its funding contribution.
“We’re paying massive, never before seen fees,” Ms Beatty said.
“When you put a 3.9 per cent indexation on a degree that’s over $40,000, that’s all of a sudden a hell of a lot more money.
“Students have to start thinking about university debt as an actual liability for when they’re buying a house, when they’re trying to get a loan on a car or making a massive financial investment.
“At the same time, we have students struggling with a cost of living crisis. They’re the ones feeling the brunt, working the highly casualised minimum wage jobs while trying to juggle university, while trying to rent.”
There were 2.9 million people with an outstanding HELP debt in 2020–21, with total HELP debt rising to over $68.7 billion, up from $66.4 billion in 2019–20, according to the ATO.
Student loans don’t attract interest, but the debt is indexed annually according to the Consumer Price Index, which measures inflation.
Inflation is running at 5.1 per cent annually and wages are currently not keeping pace.
Students start paying back their HELP debt through their taxes, once they earn above the compulsory repayment threshold, which changes each year.
The threshold in the 2022-23 income year is $48,361.
The more money you make, the higher the repayments are: those earning up to $55,836 will pay 1 per cent; those earning $62,739 – $66,502 will pay 3 per cent and those making between $70,493 – $74,722 will pay 4 per cent.
Experts have urged students to ignore the indexation increase, saying it would only affect students in the latter stages of paying off their loans, by taking them slightly longer to settle it.
“It’s pretty much irrelevant to the situation of any graduate and for even those whose wages might not go up as fast as inflation; it does almost nothing to their life, except add a very short period of extra repayment,” ANU economist Professor Bruce Chapman previously told NCA NewsWire.
“But if wages keep going up by the same extent, it all gets cancelled out.”
Those who find making compulsory repayments causes them serious financial hardship can apply to the ATO to defer payments.