HECS Debt Indexation Reforms: Relief for Medical Students

Posted on 30/5/2024

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The Australian government has introduced reforms to reduce HECS student debts by changing the indexation method. From June 1, 2023, HECS debt will be indexed by the lower of CPI or WPI, offering significant debt relief. This change is aimed at easing financial pressures on students, making education more affordable. Gain an insight into the impact of these reforms and the benefits for students, especially those in the medical field below.

Following the release of the 2024 – 25 Federal Budget, the Australian government is introducing reforms to help reduce Higher Education Contribution Scheme (HECS) student debts. The new changes aim to prevent HECS loans from growing faster than wages by adjusting the indexation method.

HECS debt indexation is an annual process whereby student loan amounts are adjusted based on the Consumer Price Index* (CPI) to keep up with inflation. Following last year’s unprecedented increase of 7.1% on 1 June 2023, the latest budget has confirmed that the annual indexation will now be calculated using the lower of either the CPI or the Wage Price Index* (WPI). This new policy will be backdated to 1 June 2023.

For students with a HECS debt, the new policy means that last year’s 7.1% increase will be adjusted down to the WPI of 3.2% and students will receive an indexation credit that will lower their debt, provided the legislation passes.

The table below shows the estimated indexation credits for various HECS debt amounts:

HECS Debt as at 1 June 2023 Total Estimated Credit
$15,000 $675
$25,000 $1,120
$30,000 $1,345
$35,000 $1,570
$40,000 $1,795
$45,000 $2,020
$50,000 $2,245
$60,000 $2,690
$100,000 $4,485
$130,000 $5,835


From 1 June 2024, student loans will be indexed at 4.7%.

These reforms are designed to ease financial pressures on students, making education more affordable and accessible. Medical students can expect significant relief, helping them focus on their studies and future careers.

It is important to note that the compulsory repayment of HECS debt commences once the *Repayment Income (RI) is above the 2024 minimum threshold of $51,550. Upon graduation and commencement of an internship, medical students can expect a repayment rate of 1% should they exceed the minimum RI threshold in the first intern year. This percentage increases as income increases.


*Consumer Price Index (CPI): A measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care, and is used to assess price changes associated with the cost of living.

*Wage Price Index (WPI): A measure that tracks changes in the price of labour, reflecting wage inflation and wage growth, used to monitor trends in wages and salaries.

*Repayment Income (RI): Refers to the total income used to determine the amount a person must repay towards their student loan HECS debt each year.

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Sam Wagner

Sam Wagner

Sam has assisted many pharmacy and medical clients in the key areas of tax compliance, business valuations and restructures, business transactions and transitioning their financial affairs to the cloud.

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