Changes to the HECS-HELP loan indexation is now law
In May this year, as part of the 2024 Federal Budget measures introduced, the Federal Government announced changes to the way in which HECS-HELP debts were indexed every year.
Historically, HECS-HELP debts were indexed by the Consumer Price Index (CPI) rates, however due to rising inflation, the CPI increase to study loans were one of the highest ever recorded, adding to the cost of living stress many Australians were facing.
The indexation method applied to HECS-HELP debts is now either the CPI rate or the Wage Price Index (WPI), whichever is lower for the year.
The changes to the HECS-HELP indexation rates are now law, having passed Royal Assent.
This change is backdated, taking effect from 1 June 2023. The new indexation rates for the two previous years are:
3.2% for 2023 year – reduced from 7.1%
4% for 2024 – reduced from 4.7%.
What does this mean for you?
If your study loan was indexed in 2023 or 2024, you’ll receive a credit on your HELP or other study or training support loan account. You don’t need to do anything. You'll receive a credit on your HELP or other study or training support loan account.
The ATO will be processing re-credits for 2023 and 2024 indexation rate changes:
To accommodate any compounding effect of the indexation across both income years.
Most clients affected will see these credits on your account by the end of January. Some credits will take a bit longer than others to show on your account depending on the complexity (for example, those with a non-pursuit waiver transaction on their account).
If your study or training loan is in credit after the adjustment, the ATO will process a refund for the excess amount to your nominated bank account – if you have no other outstanding tax or Commonwealth debts. Any existing Commonwealth debts will be offset first before any remaining credit balance is refunded.
For a HELP loan of $25,000 at 1 June 2023, you could receive upwards of $1,200 credited, depending on what repayments or additional debt has been incurred from 1 June 2023.
This will provide some welcome relief for Australians with study loans.
If you'd like to know more about how these changes will impact you, please don't hesitate to reach out to us.
Who is DGF Advisory?
DGF Advisory are Chartered Accountants and Business Advisors, with expertise and knowledge stemming from 18 years within the public practice, being trusted Advisors to SME'S and their families from a wide range of industries.
Book a FREE Discovery session and let's chat today at dean@dgfadvisory.com.au
DGF Advisory
Comments