HECS debts. HELP debts. Indexation. Consumer price indexes. INFLATION. Some of us didn’t go to school for maths and numbers, so the mere sight of such mathematical words causes our brains to shut down faster than MilkRun on a Tuesday in April. And so, I called up my engineer boyfriend who is good with taxes and percentages (among other things) to explain why HECS debts are increasing by 7.1 per cent. His brain has creases, we smooth-brained folk can trust people like that.
Strap in folks, I’m going to blitz right through this in a way that even a blind penguin could understand. My mind is simply brimming with boyfriend-borne knowledge. I am but Curious George and The Man In The Yellow Hat has bestowed upon me an intelligence banana. We are NOT leaving this article without understanding HECS debts PERFECTLY.
What is a HELP debt?
Okay, even I knew this one without having to hit up the boyfriend. HELP debt is money you owe the government for that massive loan you took out to pay for your uni fees. It stands for Higher Education Loan Program.
It used to be called HECS debt (and colloquially still is), but this was changed by the Morrison government. There was no real reason for the name change, Morrison just wanted to look like he was doing something.
Why is the HELP debt increasing?
Every year on June 1 the government takes your total debt and multiplies it by a small percentage.
This percentage increase is based on a lovely thing called indexation (I’ll explain that later, don’t worry).
This year, HELP debts will be increasing by 7.1 per cent. The percentage is so high this year because of a little thing we know as inflation.
Inflation gets worse, debts inflate accordingly and the children suffer. That’s the wicked way of the world.
Where did the 7.1 per cent come from?
Prime Minister Anthony Albanese climbed to the top of Mawson Peak to consult a wise raven on how much he should increase our debts.
Well, not really. In all seriousness, this number is dictated by our friend indexation. Lemme explain.
HELP debt indexation is a unique number, similar to the Consumer Price Index (CPI) but slightly different, which takes into consideration how much you should be paying based on the general cost of living increases.
“For example, if last year it would have cost $10,000 and this year it costs $11,000, they’re going to index it by 10 per cent,” said my darling boyfriend.
“Consumer price index is just a measure of how much things have roughly gone up — this high is quite high because of the cost of living crisis.”
Basically, your debt increase is… wait for it… indexed by how much things have gotten more expensive.
Consumer Price Index???
Okay, let’s not get bogged down in too much information. Essentially, the CPI is the index that dictates how much things like fuel, energy, transport and housing go up by.
When it comes to education we rely on the HELP debt indexation, which is extremely close to the CPI but relies on a whole different set of maths to figure out.
If you really want the finer details, you can read about how it’s all mathematically figured out here.
The problem with indexation on our HELP debts
Obviously, the big problem here is that we have to pay more money to the government for nothing.
By indexing our loans and increasing interest, the government fills up their wallets, but we don’t get anything other than debt. I mean, we already HAVE the education, why are we suddenly paying MORE money?
Another problem with indexation is that, for some (especially younger Aussies), the interest on their debts increases at the same rate that it is paid off meaning all they’re ever paying is the interest, but they never make a dent on the actual debt. Criminal.
Our wages aren’t budging but our debts are getting higher. We could always abolish the debt and tax the rich instead of taxing young Aussies, but apparently, that seems like too wild a concept for the government.
What if you just don’t pay?
Well, nothing actually happens to you but I wouldn’t encourage it at all.
If you ever want to buy a home (like, ever) your HELP debt can’t be too high or else banks will just outright refuse to loan you money.
Got $50,000 in the bank and a $50,000 HELP debt? To the bank, that means you have $0.
Yeah, it sucks out here.
Well, I hope that explains everything. I’m off to index my boyfriend’s debts, if you know what I mean.