Crossbench MPs are calling for urgent government intervention into student loan indexation to stop as many as 3 million Australians from being “swept away by a debt avalanche”.
Eight MPs and senators have written to Education Minister Jason Clare and Anthony Albanese pushing them to act immediately before the indexation of 7.1 per cent comes into effect on Thursday.
“We stand ready to support legislation which achieves this end,” they wrote in their joint letter sent on Monday.
Millions of graduates are about to watch their Higher Education Loans Program (HELP) debts – commonly known as HECS – inflate to their highest level in the three decades since the government scheme began operating.
There is no interest charged on HELP loans but indexation is added on June 1 each year to adjust debts according to the consumer price index they maintain a more real value in line with the cost of living.
People face an average increase of more than $1700 a year on their debts under the new indexation rate.
The National Union of Students is also calling for urgent federal government intervention, asking Labor to immediately freeze HECS indexation to ease the burden of student debt.
In their letter to Mr Clare and the Prime Minister, the crossbench MPs warned indexation was causing student debts to increase faster than they were being paid off.
“Larger debts take much longer to pay off, with student debt becoming a lifelong burden for too many,” they wrote.
“The growth of student debt disproportionately impacts young people and women, entrenching inequality.”
Three senators – Tammy Tyrrell of the Jacqui Lambie Network, The Greens’ Mehreen Faruqi and independent Lidia Thorpe – put their names to the letter.
It was also signed by independent MPs Helen Haines, Dai Le, Andrew Wilkie and Sophie Scamps from the lower house.
Dr Scamps said after sending the letter that parliament needed to do more to act on what she described as growing intergenerational inequality in Australia.
“Our young people are working hard to get ahead but many are struggling to keep up, or worse, going backwards,” she said.
“I’ve had many constituents write to me letting me know that despite paying off their HELP debt all year, the debt will be higher at the end of the year than at the start.”
In response to a media query about the crossbenchers’ letter, Mr Clare pointed to the increase to welfare payments for students included in the recent federal budget.
“To assist with immediate cost of living pressures, the May budget lifts the rate of JobSeeker, Youth Allowance, Austudy and ABSTUDY by $40 a fortnight,” he said.
“Commonwealth Rent Assistance is also being boosted.”
Mr Clare said the Australian Universities Accord – set up by the Albanese government – was considering a “range of issues” including affordability and access to higher education.
The accord panel is due to provide an interim report to government next month and hand down its final report at the end of this year.
Not everyone with a HELP debt will have their repayments increase. That depends on how much one earns under the thresholds set by the federal government.
Under the updated thresholds, Australians with higher education Help loans will be able to earn slightly more before they start making repayments because inflation is driving up student debts to new highs.
Graduates earning $51,550 will be required to start paying off their student loans, up from $48,361. The other repayment categories have also been bumped up.