The Government has implemented significant changes to the indexation of student loans, specifically affecting the Higher Education Loan Program (HELP) and other related schemes such as the Vocational Education and Training (VET) Student Loan and Australian Apprenticeship Support Loan. Traditionally, indexation was determined by the Consumer Price Index (CPI), but effective June 1, 2023, it will now be based on the lower of the CPI or the Wage Price Index (WPI).
Key Changes to Indexation
- The new indexation method is retroactively applied from 1st June 2023.
- The indexation rate for 2023 was initially set at 7.1% but has been reduced to 3.2%. For 2024, the rate has decreased from 4.7% to 4.0%.
Employers are advised that no action is required on their part regarding these changes. However, they should be prepared to address any enquiries from employees about the new indexation rates and direct them to consult the ATO.
The Australian Government announced significant changes to the Higher Education Loan Program (HELP) and other student loan schemes on 2 November 2024, aimed at making repayments fairer.
The key proposed changes include:
- Increased minimum repayment threshold, proposed to rise from $54,435 in 2024-25 to $67,000 in 2025-26.
- HELP repayments will be based only on income above the $67,000 threshold, rather than total annual income.
These changes are set to take effect from 1 July 2025, subject to legislation being passed.
To view further detail from the ATO on these changes and proposed changes, click here.