Legislation to cap the indexation of student debt in Australia has been passed by the House of Representatives in Federal Parliament.
Federal Education Minister Jason Clare said the new law, which has now been sent to the Senate, would wipe around $3 billion in student debt.
Minister Clare said the Universities Accord (Student Support and Other Measures) Bill caps the HELP indexation rate at the lower of either the Consumer Price Index (CPI) or the Wage Price Index (WPI).
He said the Government would backdate the relief to HELP, VET Student Loan, Australian Apprenticeship Support Loan and other student support loan accounts that were indexed on June 1, last year.
“After the legislation passes the Parliament, the ATO will automatically apply a credit for the difference between the current indexation rate and the new indexation rate to outstanding student loans.
“This will benefit all Australians with a student debt, fixing last year’s spike in the indexation of 7.1 percent and preventing indexation from outpacing wages in the future.”
Minister Clare said an individual with an average HELP debt of $26,500 would see up to $1200 wiped from their outstanding HELP loans.
He said if someone had completely repaid their HELP debt after 2023 or 2024 indexation was applied, the credit would be via a refund to their bank account, assuming there were no outstanding tax debts.
