Changes to HECS-HELP indexation and what it means for you!

The government has proposed a change to the way the indexation of HECS-HELP and other student loans is calculated. But what does that mean for you?

Firstly, it’s important to note this change is not yet law. Don’t wait until the law changes to lodge your tax return, lodge as normal.
The bill is in the process of passing through parliament before it does becomes law.

Once the law has changed, if your study loan was indexed in 2023 or 2024, you’ll receive a  credit  on your Higher Education Loan Program (HELP) or other study or training support loan account.

But why? Indexation is usually applied to your student loan based on the Consumer Price Index (CPI). The proposed change will mean indexation is applied based on either the CPI or the Wage Price Index (WPI) – whichever is lower.

Why does that matter? A higher than usual CPI resulted in an indexation rate of 7.1% being applied to student loans on 1 June 2023. (the highest this has been in 30 years) The government is proposing a retrospective change to reduce the indexation rate for 1 June 2023 to 3.2%.

If your student loan was indexed on 1 June 2024, indexation was applied based on the CPI with an indexation rate of 4.7%. The proposed change will reduce the indexation rate for 1 June 2024 to 4%.

This means you'll be automatically credited the difference on your study loan account once the law is changed.

If you've paid off your study loan account before the credit is applied, you may receive a refund to your nominated bank account. (If you have other outstanding tax debts this may be used to offset those instead).

To get an idea of how much you’ll be credited, check out the HELP Indexation Credit Estimator this opens in a new window  on the Department of Education website.