Crossbenchers urge federal government to close 'cynical' HECS loophole in budget
The crossbench is pushing for changes to a rule which slugs interest on HECS-HELP debt that former students have already repaid.
The government is facing cross-party pressure to close a "cynical" HECS loophole, with one MP warning a private member’s bill will be “ready to go” if the May budget is insufficient.
HECS-HELP debt is indexed to inflation, and reached its highest point in three decades last financial year, with the average $25,000 debt rising by $1750. Many Australians owe more at the end of a financial year despite making regular repayments.
Repayments are taken incrementally from pay packets during the year, but interest is added to the original debt before the previous year’s repayments are deducted. That means when a person holds a $25,000 debt but pays off $10,000, indexation of 7.1% is applied to the original figure – a $1050 difference.
Education Minister Jason Clare has signalled he is open to changing the rule amid soaring inflation, and after the University Accord last month called for the system to be “fairer and simpler”.
