'A drop in the ocean': HECS debt relief welcomed but some say it won't go far enough

9 News

23-07-2025

Your web browser is no longer supported. To improve your experience update it here Young Australians say they are still facing decades of repayments for their student loans, despite Labor introducing a bill to slash HECS debts by 20 percent. Education Minister Jason Clare tabled the bill on Wednesday as the re-elected Albanese government's first act in parliament. Clare said the legislation would cut the debt of three million Australians, with the average HECS debt of $27,600 being reduced by around $5500. Julia Wilding says she will still be saddled with an enormous debt, even after a 20 percent reduction. (Supplied: Julia Wilding) The reform will also raise the minimum amount before people have to start making HECS repayments from $54,435 to $67,000 and reduce minimum repayments. "This is a big deal for three million Australians, in particular, a lot of young Australians," Clare said. "Just out of uni, just getting started, this will take a weight off their back." Western Australian Julia Wilding graduated from six years of study to become an optometrist in 2023. The 25-year-old was left with a HECS debt of $130,000, and also paid $34,000 for her final six months of study upfront as she had reached the cap on the amount she could borrow from the government. Wilding said while she welcomed the $26,000 reduction in her HECS debt, it still felt like "a drop in the ocean". Wilding calculated it would take her about 30 years to pay off her HECS debt, and that was before the annual indexation applied to her loan was taken into account. "At this rate, I'll still probably be in my 50s when I finally pay it off - and I was 17 when I started uni. It's quite depressing." Wilding said she loved her job and did not regret going to university to study in her chosen field, however, the cost of her education was onerous. "The financial road is very difficult. When I think about it, it's just such an inordinate amount of money, that you just have to laugh about it sometimes," she said. Sydney woman Katie, who asked for her surname to be withheld, has a HECS debt of around $110,000 after graduating with three degrees - one in the arts, another in classical music and a third in publishing. She now works in the not-for-profit sector and estimates that she will be in her 80s by the time she pays off her HECS debt, assuming she continues to work full-time. "I appreciate any reductions," Katie said. "However, I do think that all HECS debts should be erased. It's a little bit difficult to take seriously the argument for not doing that when most of the people making those arguments got their education for free, but any relief is good relief." Students are seen walking through the Sydney University's campus. (Flavio Brancaleone) Katie said there were a number of ways the government could make things easier for students struggling with growing HECS debts, including bringing back government co-payments for voluntary contributions, or making extra contributions tax deductible. A common complaint of the current HECS system is its yearly indexation schedule. While HECS repayments are taken out of a person's salary throughout the year, these payments are kept aside by the ATO and not deducted from the total amount owing until after indexation is applied on June 1. Katie said this process seemed particularly unfair and should be changed. "They take your money out of our paycheck each pay cycle, but they don't actually pay it off until they've added the indexation, which kind of feels a bit like a slap in the face." It's a call echoed by Senator David Pocock, who told parliament he wanted to see the date of indexation altered. "It is outrageous that people with HECS debts are being charged indexation, effectively interest, on money they've already repaid to the ATO," he says. Pocock said the federal government needed to "stop going for the headline" and "embrace hard reform" when came to higher education. A wide-ranging review of the entire university system, called the Universities Accord, was commissioned by the federal government, and its findings were released in February, 2024. Clare said the government had already taken steps to address some of the recommendations included in the report, including introducing payments for students completing practical work placements as part of their studies. "There's a lot of work to do to make our higher education system better and fairer," Clare said, adding the next move would be to look at changing the funding system to be more "needs-based" and follow individual students, a reform which would benefit disadvantaged backgrounds and students from regional Australia. education
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