An increasing number of MPs and activists are calling on the government to swiftly overhaul the repayment system in light of the cost-of-living problem. Australians with student debt will have the most significant hike in decades starting on June 1.
The Australian Bureau of Statistics (ABS) issued its March quarterly numbers on Wednesday, showing that the consumer price index (CPI) for first three months of this year was at annual rate of 7%, up from last March’s 5.1% but down from the 32-year high of 7.8% in December.
In other words, when indexation is introduced on June 1, millions of Australians will see a 7.1% increase in student debts. The Greens are pleading with the government to step in and avoid the “unprecedented and deeply unjust” growth. Hecs and Help loan repayments are determined by indexation, which also determines the amount of required rebates.
Australians will witness an increase of $1,758.72 in their average student debt of $24,770.75. It will cost an additional $2,840 for more than half a million people who have debts of $40,000.
Following the announcement of the most recent indexation numbers, independent MP Zoe Daniel called for the federal government to take urgent measures to lessen the pressure on students.
Daniel claimed that in a time of “unprecedented” cost-of-living constraints, Help was not suited for its intended use.
The research demonstrates that the gender pay gap is being made worse by the existing indexation system and that women are disproportionately impacted by rising university expenditures.
“Australian students would save hundreds of dollars this year alone if indexation were applied after compulsory repayments. “All of these are temporary solutions. Help was established in the 1980s. However, it is no longer functional and needs to be independently reviewed.
A Senate committee earlier this month advised against passing a measure introduced by Senator Mehreen Faruqi of the Greens to do away with indexation and raise the minimum repayment level to the median earnings.
The threshold was lowered under the Coalition in 2019 from $52,000 to $48,361 – or approximately $6,000 above the current minimum wage.
The committee expressed worry about the budgetary implications of freezing indexation and stated in its report that it was “unclear” whether doing so would reduce cost-of-living pressures.
The “clock [was] ticking” for Labor, according to Faruqi on Wednesday, to halt the “devastating blow” of a “student debt avalanche”.
“Nurses, teachers, and other essential workers face the double whammy of low wages and ballooning student debt,” she claimed.
At the very least, Labor should put a stop to indexation for at least the next two years while the cost-of-living issue persists and inflation remains high. Being completely inaction is cruel.
Although there are immediate measures that could lessen the burden on graduates, Daniel claimed that the federal government has “made it clear” that it will not cap loans.
She suggested modifying the schedule of mandatory repayments, connecting indexation to the Reserve Bank of Australia’s trimmed or weighted average rate of inflation as a better indicator of underlying inflation, or basing indexation on the more stable wage price index, as is done in the UK.
The National Union of Students president, Bailey Riley, hailed Daniel’s assistance in addressing “the crisis of skyrocketing student debt” facing young Australians.
The federal government is attempting to make money off of young Australians during a cost-of-living crisis, she claimed, and we are already on track to become Australia’s most indebted generation.
Calls for raising the repayment threshold and doing away with indexation were backed by the National Tertiary Education Union.
Alison Barnes, the head of the union, claimed that students were regressing and were unable to pay off their debts quickly enough to establish financial security.
“Indexation, an increasing fee load, and low payback criteria are a poisonous combination that only gets worse. Financial quicksand would be a better analogy, she suggested.
“As a nation, we can and must do better.”
Jason Clare, the minister of education, stated that affordability was a “real issue” and that the Universities Accord team should investigate student debt.
“Help repayments are based on a predetermined percentage of your salary. It is based on the incredibly crucial idea that you pay what you can. And unless you make more money, you don’t pay more.
