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Sun. Jul 14th, 2024

How the changes in higher education debt will affect you

By Vaseline May27,2024

How will the change work?

The government will make the change retroactively once legislation is passed.

Since the wage price index was below 4 percent until September last year, this means that the indexation rate for June 1, 2023 will be reduced from 7.1 percent to 3.2 percent, and that the indexation rate for June 1 this year will be reduced. reduced from 4.7 percent to 4 percent.

What all that means is that once the legislation is passed, the government will apply a credit for the difference between the indexation rates on all existing student loans.

Has the HECS debt been wiped out?

No.

The government is only giving back some money as part of a cost-of-living relief measure, and the change has not yet taken effect.

The government needs new legislation to make this possible, and the bill is unlikely to be brought before the House of Representatives at the next session of parliament in the next two weeks.

It means that the original indexation rate of 4.7 percent from June 1 will be applied to all debts, but that is included in the government’s budget, and therefore its calculations also take into account a credit for 2024.

Using the Department of Education’s HELP Indexing Credit Estimator, someone with a $20,000 student loan would get a $730 credit for the 2023 amendment and a $170 credit for the 2024 amendment, totaling $900 of their debt is repaid. Someone with $60,000 in debt would have a total credit of $2,690.

How do I get the HECS debt credit?

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People with HECS debts don’t have to do anything to receive the credit. It will be applied automatically by the Australian Taxation Office once the legislation is passed.

You can also contact the ATO to see how much debt you still have.

What happens if I recently paid off my HECS debt?

Anyone who has paid off an outstanding debt since June 1 last year will still receive the credit. If there are no new student loans, that credit will simply become a tax credit.

That means people with no outstanding HELP debt or other Commonwealth tax debts will receive the credit as a tax refund, most likely in the coming financial year.

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