The education minister has said he would not intervene to reduce the burden of indexation on student loans because going to university “makes you money” and taxpayers would “cop the bill” for any reforms.
The three million Australians with Hecs or Help loans were hit with a 7.1% increase on Thursday, the highest rate in more than three decades. For people with an average student debt of $24,770, it equated to a $1,759 increase.
Speaking to Sydney radio station 2BG, Jason Clare conceded the size of student loans was going up and would take longer to pay off, but reiterated students wouldn’t face higher repayments.
“If we were to make a change to this today [freezing indexation] it’d cost taxpayers money. It’d cost the people ... who may not have a university degree, they’d have to cop the bill,” Clare said.
“And it wouldn’t mean one extra dollar in the pockets of students today to help with those things, like paying for food and rent.”
happy student debt indexation day to all who celebrate 🙃 pic.twitter.com/5VolFBWQrK
— Hiero Badge (@hierobadge) May 31, 2023
Clare went on to say going to university “makes you money” and is Australians’ “ticket to the show”, telling the radio station he was more interested in policies to help more people from low socioeconomic backgrounds accessing the tertiary system.
“If I’ve got more money to invest in higher education, that’s where I want it to go, to more kids from poor backgrounds,” he said.
On Monday, eight MPs wrote an open letter to Clare urging him to freeze indexation before the 7.1% rate – the highest since 1990 – came into effect.
Clare said a coalition of independents also approached him on Wednesday but he dismissed any action on the loan scheme until after the Universities Accord handed down its final report in December.
If you earn $60,000 and have an average-sized HECS debt, this year you will pay back $1,500 of your HECS… but your debt will increase by $1,700.
— Dr Monique Ryan MP (@Mon4Kooyong) May 29, 2023
That’s not fair, and it’s why I’ve joined other independents in urging the Federal Government to consider other options.
Universities Australia, the peak body for the tertiary system, backed in Clare, with CEO Catriona Jackson saying that while she understood people’s concerns, “one thing students don’t need to worry about is a Hecs loan”.
“While the size of the debt will get bigger today, it doesn’t mean you are paying more next week out of your tax or the week after or the week after … it’s that the term of the loan gets longer,” she told ABC radio on Thursday.
Pointing to the Universities Accord, Jackson said the review of higher education policy would take a “good look” at Hecs and give the system “a bit of a freshen up” to ensure it remained fit for purpose.
“When we had, in inverted commas, free degrees – they were never free,” she said. “The taxpayer paid for them.”
Clare has faced growing calls from both sides of the political spectrum this week to urgently act to ease the burden on graduates amid a cost of living crisis.
The unprecedented 7.1% increase in HECS/HELP indexation means many will see their repayments going backwards with lifelong consequences.
— Zoe Daniel (@zdaniel) May 31, 2023
I’ve suggested ways the government could ease the burden amid crippling cost of living pressures by adopting alternative indexation measures.
In Senate estimates on Thursday the shadow minister for education, Sarah Henderson, said the indexation rate was “crippling” for Australians and mortgage brokers were already warning it would have an impact on graduates’ ability to secure home loans.
“It appears the minister has no solutions in sight,” said Henderson, who voted against a Greens bill to freeze indexation and did not sign the open letter.
Greens spokesperson for education, Mehreen Faruqi, said millions of people had woken up on Thursday worse off and the blame lay “solely with Labor”.
“I first introduced a bill in the Senate to remove indexation and raise the minimum repayment income more than six months ago,” she said.
“The student loan system is broken.”
The education department secretary, Tony Cook, told Senate estimates the education minister had instructed the department to speak to the ATO in relation to how and when debts were indexed.
