In response to the Australian Universities Accord, the Government has proposed changes to the way indexation on your HELP debt is calculated. The changes are subject to legislative approval, and further detail might be provided in the Federal Budget on Tuesday 14 May.
The Government plans to backdate the changes from 1 June 2023. They will apply to all HELP loans, including everyone that had existing HELP loans on 1 June last year.
What is indexation?
Indexation is the amount of money added to your HELP debt on 1 June each year, designed to keep up with changes in the cost living. The indexation rate is the way the extra money you owe is calculated.
Until now, the indexation rate has been calculated based on the Consumer Price Index (CPI), which means that the rate of indexation has typically matched the rate of inflation. On 1 June last year, this was 7.1%.
What is changing?
The Government’s proposed changes will mean that indexation rates will now be capped to be the lower of either the Consumer Price Index (CPI) or the Wage Price Index (WPI).
For students that had an existing HELP debt on 1 June 2023, the Government has announced that indexation will be recalculated at the lower rate of 3.2% This means that indexation on all existing HELP debts at 1 June 2023, will be reduced.
What do the changes mean for me?
If you had an existing HELP debt on 1 June 2023, it is likely that you will receive a credit on your HELP debt that will reduce the total of your outstanding loan. This credit will reflect the difference between the recalculated indexation rate and the rate that was previously charged in 2023.
From 1 June 2024 onwards, indexation rates will be capped at the lower of either the CPI or WPI, which means you will be charged the smaller of the two rates. On 1 June 2024, this will be 4.0% if the legislation passes.
This does not affect the tuition fees you pay at La Trobe or the amounts that we report to the Australian Taxation Office (ATO) if you have a HELP loan.
How much credit will I receive and when will I receive it?
If you are eligible for a credit, this will be automatically applied to your HELP loan balance by the Australian Tax Office (ATO) after the legislation passes. You don’t need to do anything.
To get an idea of how much credit you might receive, check out the ATO Help Indexation Credit Estimator.
For more information, view the Australian Government’s announcement.