University graduates to save $680 a year on average as Albanese announces increase to Hecs threshold

Date: 2024-11-01
Anthony Albanese
Anthony Albanese is expected to describe the change as one of the “core elements of Labor’s policy agenda for a second term”. Photograph: Simon Bullard/AAP
Anthony Albanese is expected to describe the change as one of the “core elements of Labor’s policy agenda for a second term”. Photograph: Simon Bullard/AAP

University graduates to save $680 a year on average as Albanese announces increase to Hecs threshold

PM to announce change which would see minimum debt repayment threshold lifted from $54,000 to $67,000 from next financial year

Graduates will be able to earn more money before they start repaying their university debts under new laws to be introduced by the Albanese government next year.

The prime minister will announce the cost-of-living measure alongside the South Australian premier, Peter Malinauskas, at a campaign rally in Adelaide on Saturday.

The change would see the minimum repayment threshold lifted from $54,000 to $67,000 in 2025-26, with the average debt holder expected to save about $680 a year.

According to the government, a university graduate earning $70,000 a year would see their minimum repayments cut by about $1300 a year. Those on $80,000 would save $850. The change only applies to graduates earning less than $180,000 a year.

The minimum payment threshold would also be indexed to always stay at 75% of graduate earnings, in line with recommendations of the universities accord final report, released in February.

Anthony Albanese is expected to describe the change as one of the “core elements of Labor’s policy agenda for a second term”.

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“This will be the heart of the positive and ambitious agenda we take to the Australian people at the next election,” Albanese said in a statement.

“We will make it easier for young Australians to save in the future, and we are going to make the system better and fairer as well.”

Earlier this year, the federal government announced it would cut around $3bn in student debts through a key change to the Hecs and Help programs, reversing last year’s horror indexation hike and delivering a $1,200 saving for the average person.

It moved to ensure student debts could not outpace wage growth in the future by capping the indexation rate for Hecs and Help loans – tying them to whichever is lower of the consumer price index (CPI) or wage price index (WPI).

The accord, which is a blueprint for the future of tertiary education in Australia, acknowledged the Hecs/Help system could be “fairer and simpler”.

“Australians should not be deterred from higher education because of the increased burden of student loans,” the report reads.

Since the Albanese government entered office, debts have risen by more than 16% – equivalent to more than $12bn.

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ATO data showed Australians paid a record $2.9bn in voluntary Hecs/Help repayments in the 2022–23 financial year, up from $780m the previous year in a bid to escape indexation.

It was equivalent to a 272% increase in voluntary repayments.

The Greens, who are also appealing to a younger demographic for support, have announced plans to abolish all student debt and to guarantee every student a livable income.

Earlier this year, the education officer of the National Union of Students, Grace Franco, said young people studying today faced the prospect of spending decades paying off their debts.

“We’re set to be the most indebted generation in history,” she said.

“The Hecs system is broken. It’s impacting student’s abilities to afford houses, to start families, and to continue further education.”

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