About 3 million students and graduates will see their Higher Education Loan Scheme (Hecs) debts increase by $1 billion on Monday, when they are indexed by 2.8%. Independent MP Monique Ryan criticized the current indexation system and proposed shifting the annual adjustment date from 1 June to 1 November, a change she said would save graduates more than $3 billion over a decade.
"Rising student debt is not an accident. It’s the result of deliberate policy choices made by Liberal and Labor governments," Ryan said. She argued the system is fundamentally flawed because Hecs payments collected through the tax office are not applied to borrowers’ accounts until after tax returns are filed—typically months after the 1 June indexation date. "We need to fix this broken system. When you make a payment on your home loan, its balance goes down. Graduates’ Hecs payments aren’t being accredited to their accounts in real time, and that’s costing them dearly," she added.
Hecs debts do not accrue interest but are adjusted annually to reflect inflation or the wage price index, whichever is lower, to preserve the real value of the debt. However, because student repayments deducted from salaries throughout the year are not credited to their Hecs accounts until after indexation occurs on 1 June, borrowers are charged indexation on amounts they have already paid. Moving the indexation date to 1 November would allow those payments to be accounted for before adjustment.
According to Parliamentary Budget Office costings, the proposed change would reduce the budget’s underlying cash balance by $1.2 billion in forgone revenue over four years. In the first year alone, students would save $58 million in indexation charges, with annual savings growing to over $150 million by 2035–36.
Education Minister Jason Clare acknowledged ongoing concerns, stating, "We’ve already made some important changes to the way Hecs is indexed, and that had important benefits for young people right across the country. There is a lot of unfinished business and there’s more work to do." Clare also said the government aims to "make it easier for young people to get a degree cheaper and faster." In December 2024, the government changed Hecs indexation rules to apply the lower of inflation or the wage price index.