Calculations for the latest student loans indexation rate churned out by news outlets predict the rate to be between 4.7 and 4.8% for the 2024 indexing on July 1 this year.
This would be the second biggest rise in HECS-HELP loan indexation in the last decade, following last year’s whopping 7.1% rate.
The government has not released their official announcement yet, but these rates have been calculated with the same formulas the government will use.
SO, WHAT HAS NEWS OUTLETS SAYING THIS?
The latest consumer price index (CPI) by the Australian Bureau of Statistics for the March quarter has been released and each of the outlets have crunched their numbers to work out their indexation rates.
The news outlets have calculated this using the formula provided by Australian legislation. (s140-10 Higher Education Support Act 2003 (Cth) if you are so legally inclined).
The formula calculates the sum of each CPI for the quarters of the current financial year and divides that by the sum of the CPI’s for the preceding financial year.
For example, this year’s looks like:
SO, WHAT IS THIS MYSTERIOUS CPI?
The CPI is a number calculated by economic modelling used to measure the change in prices for goods and services from year to year. Basically, another way to measure changes in cost of living.
It is calculated by taking a fixed basket of goods and services that represents what a typical household spends in a year and compares the price of that basket to past years.
This basket is determined by expenditure surveys of Australian households.
That’s it. That is how indexing HECS-HELP loans is decided. A number is figure out through economic models and the government uses this number to decide how much they will index loans.
WAIT, YOU HAVEN’T HEARD OF INDEXATION?
In a nutshell, your HECS-HELP loans are interest free. HOWEVER, every financial year the government indexes your loan “to keep up with changes in the cost of living”. It operates in a similar way to interest in that your loan will increase by the indexation rate each year.
Uni students have been attempting to combat indexation in recent years. Last year, a bill was rejected by the federal parliament. This bill included reports from students across Australia – including a submission from QUT Guild – and proposed for indexation to be abolished and removed from HECS-HELP loans and for the minimum repayment threshold to be increased to the median wage of a full-time worker.
More recently, Federal MP Dr Monique Ryan has created a petition to pressure the government to change the HECS-HELP indexation. Her proposed change is “for the government to apply the lowest indexation rate in a year, whether it’s wages or prices, so that no one’s debt rises faster than they can pay it.”
You may have also seen her content on this petition in your TikTok feeds.
If you wanna hear a full explanation of HECS-HELP loans take a listen to this episode of our podcast ‘Just To Be Clear’ 😉
ABC has also been particularly sadistic yet helpful and you can calculate your loan increase with their calculator.
