The federal government has announced that HECS will be indexed by the lower of the WPI or the CPI, but what does this mean for the amount you owe?
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00:00 The federal government has announced big changes to HECS starting in June.
00:04 So what does this mean for your debt?
00:06 Student loans are usually indexed according to the Consumer Price Index, or CPI,
00:11 which measures the change in the cost of a metaphorical basket of consumer goods
00:15 (bread, shoes, transport, houses).
00:18 Last year, the CPI went up 7.1%,
00:21 while wages, measured by the Wage Price Index, or WPI, only rose by 3.2%.
00:27 From this year, the government wants HECS to be indexed at the lower of the two,
00:31 hopefully preventing the indexation rate from outstripping wage growth.
00:35 But at 3.2%, that's still the highest indexation rate since 2009.
00:40 The new system applies retroactively to last year,
00:45 so whatever you owed last June 1 will now be re-indexed at 3.2%,
00:49 replacing the original 7.1%.
00:52 If you'd had $100,000 of HECS debt, that difference amounts to over $3,500.
00:57 So where does that money go?
00:59 If you paid off your HECS debt last year,
01:01 you'll receive a tax credit that will be applied to any outstanding debts you have with the ATO.
01:05 If you don't owe the ATO any money, keep a lookout for a nice tax refund coming your way.
01:10 If you do still have HECS to pay off, the lump sum of your debt will go down slightly.
01:15 As of right now, the legislation needed to bring the WPI into the equation hasn't been passed into law.
01:21 If it gets through by June 1, HECS will be indexed at the CPI as usual,
01:25 and another round of credits will be issued.
01:27 [ Silence ]