New changes will reduce HECS debt, but how much will you save?

University students and working professionals across the country will see $3 billion slashed from their HECS debt.

University students and working professionals across the country will see $3 billion slashed from their HECS debt. Photo: Getty

The Albanese government has addressed a huge source of frustration for students by reducing student HECS increases, alongside introducing paid placement for teachers, nurses and social workers.

So how much exactly will people save?

Prime Minister Anthony Albanese announced on Sunday that HECS debt indexation, or the way the interest is calculated on student loans, would be tied to the lowest of the Wage Price Index (WPI) or Consumer Price Index (CPI).

It was previously just tied to the CPI.

“The lower figure of either the average wage or indeed the inflation rate will apply and what that will do is reduce student debt by $3 billion,” Albanese said.

“For the average HECS payments that are required – a figure of $26,000 – that means a saving of $1200.”

Minister for Education Jason Clare said that for the first time ever, the Commonwealth government is also going to provide financial support to teaching, nursing and social work students.

“Placement poverty is a real thing, so many students have told me that it’s forced them to either drop out of their course or delay completing their degree,” he said.

“This is on top of the announcement we made yesterday to make the HECS system fairer, part of the first stage of our response to the Universities Accord.”

Nursing, teaching and social work students will receive about $320 a week during placement from July 2025.

How much will you save?

According to the Department of Education’s calculator, people will receive the following indexation credit for 2023 and 2024:

  • $30,000 in HECS debt will save $1345
  • $40,000 in HECS debt will save $1795
  • $50,000 HECS debt will save $2245
  • $60,000 HECS debt will save $2690
  • $70,000 HECS debt will save $3140
  • $80,000 HECS debt will save $3590
  • $90,000 HECS debt will save $4035
  • $100,000 HECS debt will save $4485.

The average HECS debt of $26,500 takes an average of 7.9 years to pay off, according to the federal government’s data.

The average university student graduates with $26,500 in HECS debt. Photo: Facebook/UNSW

Calls for universal support

Mehreen Faruqi, the Greens’ education spokesperson and deputy leader, called the move a “slap in the face” to students experiencing the financial pressures of placements.

“Today’s announcement shows the pressure is moving Labor in the right direction, but reflects a lack of understanding of the severity of placement poverty and its impact on students,” she said in a statement.

“Every student should be paid for every hour of work they are required to do. The payment should be universal and not limited by degrees.”

New Zealand has introduced paid payments for medical students in their final year of studies, but Australian student medical students are struggling to make long placement hours financially viable.

Allen Xiao, a medical student at the University of Melbourne and president of the Australian Medical Students’ Association, said he would like to see the government address the financial pressure that medical students face from placement.

“It’s welcome news that nursing, teaching and social work students have gotten this payment and that the government is recognising that these professions are vital to our health care and society at large,” he said.

“All we are asking is that the government also put medical students on the agenda.”

He said the pressures of placement, where students can sometimes be required to commit to 40 hours a week, have a serious impact on students.

“Rural students and those from a lower socioeconomic status find it harder and harder to become doctors because of the cost of relocating,” he said.

“The students who are hardest hit in this crisis are the ones who become the doctors we need the most.”

Topics: HECs
Stay informed, daily
A FREE subscription to The New Daily arrives every morning and evening.
The New Daily is a trusted source of national news and information and is provided free for all Australians. Read our editorial charter.
Copyright © 2024 The New Daily.
All rights reserved.