Federal Budget 2024: How Much Money Will You Be Saving With Student Debt Relief?

Federal Budget 2024: How Much Money Will You Be Saving With Student Debt Relief?

The 2024-25 Federal Budget has landed, and it has brought a number of changes for Australians. One particularly positive thing we can look forward to is the cutting of about $3 billion worth of student HECS-HELP debt. Here’s what you need to know.

Australian Government announces cut to HECS-HELP and student loans debt

The Minister for Education, Jason Clare, and Minister for Skills and Training, Brendan O’Connor, announced in a statement that the federal government planned to cut the student debt of over 3 million Australians in the 2024 budget, which will clear around $3 billion in debt. This has since been confirmed in the Federal Budget by Treasurer Jim Chalmers.

HECS-HELP loans are loans provided by the government to help students cover the fees for courses at approved tertiary institutions in Australia. While the loans don’t incur interest like traditional loans, they are indexed each year on June 1 according to inflation rates – which we all know are extremely high right now. This has resulted in HELP debt indexation rates rising substantially in recent years, with 2023’s rate rising to a decades-long high of 7.1 per cent.

A new change in the 2024 budget will cap the HELP indexation rate to be the lower of either the Consumer Price Index (CPI) or Wage Price Index (WPI). This means that the indexation rate on student loans in 2024 – including HECS, VET and Australian Apprenticeship Support Loans – will be more reasonable (a proposed 4.0 per cent). The government also said it would backdate this change to June 1, 2023, meaning millions of students on support loans will actually see some money taken off their debts in the form of indexation credit.

“This will wipe out around $3 billion in student debt from more than three million Australians. The Universities Accord recommended indexing HELP loans to whatever is lower out of CPI and WPI,” Mr. Clare said in a statement.

“By backdating this reform to last year, we’re making sure that those with student loans affected by last year’s jump in indexation get this important cost-of-living relief,” Mr. O’Connor added.

On the Budget’s changes to HECS-HELP loans, the government shared the below as part of its statement:

“This [change] will provide relief for everyone with Higher Education Loan Program (HELP) and other student loan debt. The integrity and value of the student loan system, which has massively expanded access to tertiary education, will continue to be protected.”

How much are Aussie students set to save thanks to indexation credit?

With this change in the Federal Budget, it means that all the student loans that were indexed at the 7.1 per cent rate last year will instead be charged a rate of 3.2 per cent, resulting in about 4 per cent of that indexation being credited back into their accounts and wiping out some of the debt.

The amount you get back is based on the size of your student loan, but the government has provided a table with the estimated amount students will be credited, with amounts up to $5,000 expected for those with the largest debts.

HECS debt changes.

Those looking for an exact estimate of how much credit they will receive can use the government’s HELP Indexation Credit Estimator tool.

For more information on the changes from the Federal Budget, stay tuned to Lifehacker Australia.

Lead Image: United Artists Releasing/iStock

This article has been updated since its original publish date.

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