The government promised to cut my HECS debt. When will I get it?

Australia Broadcast Center

3 days ago

Before the federal election, Labor made a promise to cut student loan debts like HECS and HELP debts by 20 per cent if it was re-elected.
Well, Labor won and the new session of parliament is due to start again in July.
So what does that mean for you if you have an outstanding student loan? We answer some of your biggest questions.
Nothing. If you still have an outstanding HECS or HELP loan as of June 1 this year, then the cut will automatically be applied by the Australian Tax Office, or ATO.
It's important to note here that the tax office isn't going to be giving you cash if you still have a debt. Rather, the cut will be applied to how much you owe and taken off the balance.
Federal Education Minister Jason Clare has called the cuts "a game changer" and said they're part of a suite of measures aimed at taking the burden off current students and graduates.
"This builds on the changes we made last year to make indexation fairer, and all up this means we are wiping close to $20 billion in student debt," Mr Clare said.
Prime Minister Anthony Albanese says it's the first piece of legislation the new government will introduce when it returns on July 22. But the new laws to cut debt will only come into effect AFTER the laws are passed (whenever that is).
The cut will be backdated to June 1, before indexation (which adjusts your loan according to inflation) is applied. This year, debts will rise by 3.2 per cent due to indexation.
So even though the laws won't come in till after June 1, they'll be applied to the value of your loan before that 3.2 per cent increase hits.
Lucy, 28, from Brisbane, has just shy of $9,000 left to pay off on her dual Nursing/Paramedic Science degree. She messaged triple j's Hack to ask if it would make sense to pay it off before being slugged with indexation.
"I've been [sacrificing] to pay it off early," Lucy told Hack.
The 20 per cent cut only applies to loans as of June 1. So if you paid it off earlier, you're out of luck. You won't be getting any money back.
If you paid it off after June 1 but before the end of the financial year, then you WILL get the equivalent of the 20 per cent cut back in your tax return (as long as you don't owe the tax office anything).
If Lucy decides to wait to pay off her HECS debt, she'll expect around $1,780 off her total, taking her from an outstanding debt from $8,900 down to $7,120.
The average HECS debt is around $27,600, according to the federal government. The average cut will be about $5,500.
But it'll cost the budget a whopping $16 billion.
At the last election, the Coalition said it wouldn't support the student loan cuts, though new Opposition Leader Sussan Ley has since said all policies are now under review.
"This isn't real reform, this doesn't change the student fees that someone who starts university next year pays," former education minister Simon Birmingham said.
Labor will need the support of the Coalition or the Greens to get the cuts through the Senate.