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More than a quarter of Aussies with HECs see home loan borrowing power slashed as debt grows

Reviewed by expert, David Koch
4 min read
6 May 2024
man paying off credit card debt holding head

From being knocked back for higher home loans to settling for unsatisfying jobs or owing more money at tax time, alarming new research from Compare the Market has revealed the significant impact growing HECS debts are having on the lifestyle of Australians.

Due to indexation, HECS debts are tipped to increase by 4.7% on 1 June for almost 3 million Australians, which is having unprecedented consequences for those who took out loans to help cover their studies.

According to Compare the Market’s latest data, more than a quarter of Australians with a HECS/HELP debt that we surveyed (29.69%) say their HECS debt has impacted their borrowing power to buy a home. Compare the Market’s Economic Director David Koch said that these aren’t things people factor in when taking out student loans in the first place.

“HECS was never supposed to be prohibitive, but that’s what it could be becoming,” Mr Koch said.

“When a bank looks at you if you’re seeking a loan, they look at anything that is going to affect your repayments.

“HELP debt, or HECs as it was previously called, is a very low-risk debt, but it can also negatively affect your borrowing power.

“Unfortunately, millions of Australian university students, or people who are still paying off that HELP debt, are about to be flogged with a cruel increase in the amount they owe, thanks to soaring inflation.

“HELP loans don’t accumulate interest like credit cards, but they are hit line with inflation through indexation.

“Last year, the indexation rate surged by an eye-watering 7.1%. But this year, HECS debts are tipped to increase by 4.7%.

“While this smaller number may seem like relief compared to the previous year, it’s still going to set the average HECS loan back by more than a thousand dollars.”

Home loans aside, Compare the Market’s data found that growing HECS debts are having other major lifestyle impacts on Australians.

Around 1 in 5 people surveyed (20.67%) say they haven’t even been able to find work or pay off any of the debt, meaning that it’s growing even more each time HECS debts are indexed.

A similar number (21.8%) say they’ve had to seek out better jobs to pay off their student debts faster, while 12.78% say they’re making additional contributions to pay it down faster to beat CPI indexation.

“The last thing we want to see is people forking out thousands of dollars to pay off their debts, only to have similar amounts added again the following year due to indexation,” Mr Koch said. “It’s unsurprising that so many people with HECS debts are feeling trapped right now. It could be time for the nation’s leaders to make the process easier and fairer for the millions who have taken out loans.”

The average student HECS debt in Australia is currently $26,494.

Therefore, come 1 June, this bill will go further into the red by $1,245 to $27,739. It could be even more if you have a larger debt.

Elsewhere in the survey, 17.29% said the last indexation meant they owed tax the previous financial year, while around a fifth of respondents (21.42%) said they won’t be able to study again.

“The reality is that some Australians have so much HECS debt that they’ll never be able to pay it back,” Mr Koch said. What’s worse is that for many of these people, it’s going to have financial consequences for the rest of their lives, and at a time when prices are already skyrocketing.”

*Survey of 1,010 Australian adults, conducted in April 2024. Results based on the 266 of respondents who said they had a HECs or HELP debt.

For more information, please contact:

Natasha Innes | 0416 705 514 | [email protected]

Compare the Market is a comparison service that takes the hard work out of shopping around. We make it Simples for Australians to quickly and easily compare and buy insurance, energy, travel and home loan products from a range of providers. Our easy-to-use comparison tool helps you look for a range of products that may suit your needs and benefit your back pocket.

Data for journalists:

Impacted my borrowing power for a home loan: 29.69%

I can’t afford to study again: 21.42%

I’ve had to seek out better jobs to pay it off faster: 21.80%

I’ve not been able to find work or pay off any of the debt: 20.67%

I owed tax last year due to indexation of my student debt: 17.29%

I have been making additional contributions to pay it down faster to beat CPI indexation: 12.78%

No, having a HECS/HELP debt has not impacted my lifestyle: 22.93%


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avatar of author: Phillip Portman

Written by Phillip Portman

When he’s not busy writing, Phillip can usually be found at the movies, playing with his Italian Greyhound Wilma, hanging out with his cockatiel Tiki, or talking about everything pop culture. He has a Bachelor of Arts in Communication and Journalism and has previously written about health, entertainment, and lifestyle for various publications. Phillip loves to help others and hopes that people learn something new from his articles.

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