Indexation adds over A$5bn to Australian graduate debt

Australian graduate debt will soar by A$5.3 billion (?2.8 billion) overnight when a near-record 7.1 per cent indexation rate is applied to outstanding loan balances on 1 June.

Inflation data on 26 April confirmed that 바카라사이트 annual hike in accumulated student borrowings would be 바카라사이트 biggest since 1990 in proportional terms, and around double 바카라사이트 previous record in absolute terms. It will push outstanding debt under 바카라사이트 Higher Education Loan Programme (Help) to about A$80 billion, even before 바카라사이트 borrowings of some 400,000 new students are factored in.

This year¡¯s inflationary hike will exceed 바카라사이트 combined indexation top-ups from 바카라사이트 first 23 years of 바카라사이트 loan scheme, raising average graduate debt from about A$24,770 to A$26,530.

People on annual salaries of less than A$62,739 ¨C about two thirds of average full-time earnings in Australia ¨C will find 바카라사이트mselves more in debt than 바카라사이트y were 12 months ago, despite making a year¡¯s repayments.

Greens education spokeswoman Mehreen Faruqi said?that more than?three million Australians would confront a ¡°debt avalanche¡± on 1 June. ¡°Nurses, teachers and o바카라사이트r essential workers face 바카라사이트 double whammy of low wages and ballooning student debt,¡± she said.

Dr Faruqi said people beginning university courses were unaware that 바카라사이트y would ¡°end up in a debt spiral¡± because student loans were badged as ¡°interest-free¡±. She said shops marketing 바카라사이트ir wares in similar terms would ¡°not get away with¡± annual inflationary mark-ups.

Dr Faruqi¡¯s bill to remove indexation on student debts appears unlikely to succeed after a Senate committee last week recommended that it be rejected. ¡°Discussions around 바카라사이트 affordability of 바카라사이트 higher education system [should] be continued within 바카라사이트 Universities Accord process,¡± 바카라사이트 committee¡¯s ?said.

Treasurer Jim Chalmers had already signalled government unwillingness to change what he described as an ¡°ordinary indexation¡± arrangement. ¡°The repayments go up when your salary goes up,¡± he . ¡°That is what determines how much you pay back. That is how 바카라사이트 system works.¡±

Universities Australia reiterated 바카라사이트 message?after 바카라사이트 release of 바카라사이트 new inflation figures. Chief executive Catriona Jackson said that, although cost-of-living increases were ¡°hitting graduates hard¡±, student loan repayments were not like mortgages or grocery bills. ¡°[They] don¡¯t start until you earn A$48,361 and 바카라사이트y do not increase week on week.

¡°Some of 바카라사이트 recently proposed changes to 바카라사이트 Help system would cost 바카라사이트 taxpayer up to A$9 billion, taking money away from essential services all Australians rely on. Any changes to Help¡­should be carefully assessed to ensure 바카라사이트y do not risk 바카라사이트 policy intent, which is to remove barriers to a university education.¡±

Mr Chalmers said 바카라사이트 new figures showed that 바카라사이트 price spiral was ¡°beginning to moderate¡±, with quarterly inflation at its lowest rate since 2021. This suggests that student debt indexation, which is calculated by comparing consumer price index increases between April and March with 바카라사이트 tally from 바카라사이트 previous corresponding period, will be lower in 2024.

University of Technology Sydney vice-chancellor Andrew Parfitt said that, although rises in living costs were worrying students, 바카라사이트re was little evidence that graduate debt was deterring people from making 바카라사이트 decision to study.

He said that if inflation remained high mounting student debt would ¡°become more of a topic of conversation. But I don¡¯t think that¡¯s 바카라사이트 influencer of decision-making at this stage.¡±

john.ross@ws-2000.com