The debt is not a charged interest, meaning it does not collect interest over time. However, the rate will be indexed, meaning the full amount of debt is adjusted depending on inflation rates each year. Over the last decade, the indexation rate has been just under 2%, but as inflation rates have increased, the indexation rate has too, resulting in a high 3.9%. It is expected to reach even higher in June this year, with experts predicting to reach over 7% indexation. However, this will not be confirmed until the end of the March quarter, when inflation figures are revealed.
Outstanding HECS debts currently sit at $74 billion, according to a study of the Australian Tax Office by the Parliamentary Budget Office. Deputy Greens leader, Mehreen Faruqi stated that “No one should be shackled with tens of thousands of dollars of student debt which is ballooning with inflation”, calling the current system “unfair and unsustainable”.
Thousands of graduates have signed a petition for the government to minimise or axe the indexation rate altogether. The Greens, backed by the National Union of Students, are also calling for the government to abolish the indexation rate.