Bonus Episode: How HECS/HELP Debt is Changing

the Order KERNI Whoalbury and a waddery woman. And before we get started on She's on the Money podcast, I would like to acknowledge the traditional custodians of the land of which this podcast is recorded on a wondery country, acknowledging the elders, the ancestors and the next generation coming through as this podcast is about connecting, empowering, knowledge sharing and the storytelling of you to make a difference for today and lasting impact for tomorrow.

of maybe many solo rants to come. But I wanted to do a little micro bonus episode because a lot of you have been asking me recently about how hex and help debts have been changing, and I thought, instead of getting the whole team together and dragging everyone out of bed earlier than they want to get out of bed, I would just jump on the mic explain a few things, and hopefully over time this can be a reoccurring theme to make sure that we are as up to date

with what's going on in the media and what's going on in.

So today I thought i'd get you up to speed on how things are changing, what sort of amounts your debt is going to go down by, and how to receive a credit if you're eligible for one. So before we get there, let's just talk about why hex is actually changing. So basically, because we all know that the debt was increasing at a higher rate than wages. So if you're making minimum repayments, we found that many of your outstanding balances were then more than what they were

the previous year, so that obviously is quite rude. So instead of interest charged on a HEX debt, our student debts had risen each year in line with what they call CPI, so consumer price index. This isn't a new concept. This has happened every year since HEX was introduced, so

this isn't new. But after an inflation blow up last year and millions of us being absolutely slammed with really big increases, the government has decided to move to CAP index, which is actually the lowest out of CPI and the wage price Index. So instead of them slapping on that seven point one percent of consumer price Index to our HEX and help debts, they're going to move to the WPI, which again wage price index, which is approximately four point

seven percent. But then when the budget came out, they are now estimating that to be around four percent. So last year was bad because obviously our debts increased by seven point one percent, and now they're saying, all right, that was pretty hectic, not so keen on that. Let's actually drop it down to four percent. And what we're going to do is backdate that. So anyone who paid that seven point one percent, we're going to give them a refund of what they have paid, So hex indexation

is changing, and it's not just for this year. They've now introduced this idea that debts are going to increase in line with whichever is lower. So whether CPI is lower or WPI is lower, whichever is the smallest one, they're going to go with that. GPI. Just to step back a little bit, CPI essentially measures the movement in a price of like a fixed basket of goods and services. And it sounds really fluffy, but that genuinely is how

they calculate it. They go to calls or woolies and basically have a number of goods and services that they basically benchmark the prices against. So then WPI, which is that wage price index, which you might not have heard before because we haven't really used this across the board for indexing anything that measures the movement in wages and the price employers pay for labor. So that's how much essentially our income increases each and every single year across

the board on average. And that's why last year I was jumping up and down because the indexation rate on our superannuation was seven point one percent, but we didn't get pay rises in line with that, which is why I was asking everyone to go to their employer and push for that, because it is wild to think that you wouldn't be able to afford to purchase the same basket of groceries this year that you were able to

last year. You should at least be in a position where your income is keeping up with being able to put the same amount of bread in a basket as you were the year before. Right, So both are measured across the economic quarters of March, June, September and December, so that's when it's all reported. And as I said before, the changes are going to be backdated to basically raise last year's jump, which I think is lowkey, very sexy, and it's going to be applied as a credit to

your debt. So the government has said that this move is going to prevent and I say in quotation marks prevent growth in debt outpacing wages in the future, which I think is really honestly, it's a very smart way to do it, because I think the inflation as they're predicting can in the future get out of hand again. And it was a pretty rude experience to go through

last year. Right, So the changes are going to have to be passed by June one this year, so it's coming up very soon, so it will bring down this year's incoming jump so that we don't get slammed with having to pay CPI again. And it's going to undo last year's changes. So let's go to a quick break so you can absorb all of that, and then we'll jump into how much your debt is going to go

down by? All Right, guys, we are back and I am on a little bit of a solo rant about HEX and help debat, which honestly, I'm just glad that everybody let me do this, like this is my time to shine.

a credit of six hundred and seventy dollars. If you jump up to twenty five thousand, you would get a credit of eleven hundred and twenty dollars, thirty five thousand you get a credit of fifteen hundred and seventy dollars, And if you had a help debt of forty five thousand dollars, you would get a credit of two thousand and twenty dollars, which at this point in time, I feel like so many people in our She's on the money community are sitting around that fifty thousand dollars like

hex slash help debt range, because we're all just getting out of UNI and we haven't had time to smash it out. So aragon two grand as a refund is a pretty nice sum. I mean, in a perfect world, we wouldn't have to pay anything, right, but this is not that perfect world, and they do slam us with some indexation, but what I need you to keep in mind is that your credit amount is actually going to vary based on your individual circumstances, including the repayments that

you made during the year. So all help debts the indexed in twenty twenty three are now still subject to indexation on the first of June twenty twenty four, and you'll receive your indexation credit. However, if you did not incur indexation, you'll not receive the credit. And I know that that sounds silly to say, because it makes sense.

I feel like that math maths. But a lot of people are now asking the question of, well, Victoria, I paid off my HEX debt to avoid indexation completely because you know, maybe you wanted to increase your serviceability on a home loan, or it was just giving you anxiety, or you didn't feel comfortable with it.

don't feel like that's me going. Of course, you're not going to get a refund for something if you didn't spend the money. But next question here, how do I get that credit?

We don't want to owe tax and in a perfect world, according to the government, they don't want to owe you money either, so it's a break even situation. In that situation, you would end up with a credit and potentially as sneaky little tax refund, which would be very very nice. A lot of people have been asking me who is eligible for HELP or HEX Debt Assistant. So you're going to be eligible if you had an outstanding debt that was increased on last year or is set to be

indexed this year. If you had debt indexed in both years, you're going to get a credit for both, which is a money win. And the relief is also going to be applied to apprentices with debts through the VET Student Loan Program or the Australian Apprenticeship Support Loans. So I think that's important as well, just with dotting all our eyes and crossing all our teas to make sure you

have all of the information. But as I said, if you paid back your HEX debt last year former students who paid back their outstanding student loan between June the first, twenty twenty three and the time the new proposed legislation is passed, you're going to be eligible for a tax credit.

So instead of getting that credit applied to your loan debt, it's going to be put on your tax and the Department of Education they've come out and they've said that if your help Debt account balance is less than zero as a result of the reduction, you don't have to pay other primary tax or Commonwealth debts, and the credit will be refunded via the usual ATO refund mechanisms, which is basically your normal financial institution account recorded by the ATO, i e.