The Albanese government is championing a reduction of HECS debt as a victory for the government, as independent cross-benchers who drove the change call for more action on student debt.

Jason Claire, minister for education, said on Thursday the bill reforming the indexation on HECS and HELP debts had passed the house and is now “off to the Senate”.

“The Universities Accord recommended indexing HELP loans to whatever is lower out of CPI and WPI,” he said.

“We are backdating this reform to last year. This will wipe out what happened last year and make sure it never happens again.”

HECS debt indexation was previously tied to the consumer price index (CPI), but will instead be tied to whichever is lower between the CPI or the Wage Price Index, once the bill passes the Senate.

A person with a debt of $26,500 will have $1,200 reduced from their total outstanding loan, according to the Albanese government.

The changes followed 288,000 people signing a petition started by Monique Ryan, the independent MP for Kooyong, after people with HECS debt experienced the steepest student debt increase since 1990.

The Senate’s education and employment committee recommended backing the bill on October 3.

Policy win

Independents like Ryan and Goldstein MP Zoe Daniel, however, are pushing the government for more action.

Daniel told The New Daily that increased costs for degrees have “left students with punishing HECS/HELP debts”.

“Changing the timing of HELP debt indexation would allow the ATO to ensure that amounts withheld from debtors income are taken into account before indexation occurs,” she said.

“Further, exempting HECS debt from consideration by lenders when graduates apply for home loans would make a huge difference, as they look to buy a home of their own.”

Opposition Peter Dutton has previously attacked the independent crossbench by questioning what they have achieved in their first two and half years in parliament and has ramped up campaigning in the traditional Liberal heartlands of inner-city Melbourne and Sydney, where independents like Ryan and Daniel won at the 2022 election.

Addressing HECS indexation will represent a significant policy that they can point to, despite not holding the balance of power, alongside ensuring that the net-zero target of 43 per cent reduction by 2030 was a floor, not a ceiling.

Predictions of a Labor minority government at the next federal election would mean that it would be forced to turn to the crossbench for supply and votes in parliament.

Prime Minister Anthony Albanese ruled out any coalition with the Greens earlier this week, who have been the subject of his ire, leaving independent cross-benchers in a powerful negotiating position if a minority government is elected.

 Job ready?

If the Albanese government is serious about further tackling student debt, then commentators say it should look no further than a Morrison-era scheme that increased costs for a variety of subjects.

The Job Ready Graduate scheme, introduced amid the COVID-19 pandemic in 2020, increased the price of these degrees by cutting government funding and increasing student contribution to the cost of their degrees by 113 per cent.

Andrew Norton, a Research Fellow at the Centre for Independent Studies, said that arts, law and business students are now taking on a $50,000 or more debt for a three-year bachelor’s degree.

“For arts graduates especially many of them will take a long time to repay if they ever do,” he said.

“One of the reasons for that is indexation on a large balance means that some graduates who are repaying don’t necessarily make much if any progress on reducing their debt.”

The cost of getting a degree in engineering, architecture and building, nursing, teaching, agriculture, mathematics and statistics all dropped by between 17 and 59 per cent because of the policy.

Members of the senate crossbench highlighted that the government had not included any changes to Job Ready Graduates in the legislation, despite the government’s Universities Accord review being highly critical of the scheme and the analysis showing it had little to no impact on what degrees students are choosing.

“The Review has also noted that the attempt to incentivise students to move to fields of national priority and away from fields such as humanities has had little effect on student choice,” the Universities Accord final report said.

“The student contributions have mainly led to some students incurring significantly higher debts that they are unlikely to repay in reasonable timeframes.”