Update on Student Loan Indexation Changes

Posted at 08:32h in News, Tax by Simmons Livingstone

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Good news! The Australian Government has implemented changes to reduce student loan debt for over 3 million Australians with Higher Education Loan Program (HELP) and other government student loans. These adjustments aim to ease financial pressures by addressing the way indexation is applied.

Read on to find out more information on these updates.

What has changed?

Previously, the indexation rate for student loans was tied to the Consumer Price Index (CPI), resulting in significant increases of 7.1% in 2023 and 4.7% in 2024. The Government has now revised the formula to use the lower of the CPI or the Wage Price Index (WPI), ensuring that indexation never grows faster than average wage increases.

This change is being applied retrospectively from 1 June 2023 and loan holders will see these adjustments automatically reflected in their balances.

The 2023 indexation rate is reduced from 7.1% to 3.2%
The 2024 indexation rate is reduced from 4.7% to 4.0%

What does this mean for you?

If you had a student loan on or after 1 June 2023, your outstanding balance will be reduced to reflect the lower indexation rates. For those who repaid their loans after 1 June 2023, an indexation credit may be refunded to your nominated bank account by the Australian Taxation Office (ATO).

Our team can assist you in understanding the financial implications of these adjustments, whether it’s reconciling your tax records, tracking refunds or planning your financial future with the reduced loan balances. Please contact your Simmons Livingstone advisor on 1800 618 800 or via email at admin@simmonslivingstone.com.au.