A 20 per cent cut to student loans is now just weeks away.
The slashing of HELP bills, including HECS debts, is rolling out by the end of 2025 and is welcomed relief for some 3 million Australians who owe money on their tertiary education — but some say the relief does not go far enough and a “token policy”.
Those with a HECS debt will receive an automatic 20 per cent reduction on the outstanding amount owing, backdated to June 1.
An election promise made by the federal government earlier this year, Education Minister Jason Clare said the reduction would “save millions of Australians thousands of dollars”.
“We’ve also made student repayments fairer. For someone earning $70,000 a year, it will cut the amount they have to repay every year by $1,300,” Mr Clare said.
However, changing indexation rates and course fees alongside the 20 per cent reduction have left many students and recent graduates questioning whether it is worth paying off their HECS debt early amid the confusion.
Kristel Rodrigues
Kristel Rodrigues, 24, weighed up paying off her HECS debt or saving for a home loan.
“I was planning on making voluntary contributions just to bring it down because when I’d think about [my HECS debt] getting indexed all the time, that was so stressful,” she said.
“I wasn’t sure if it was better to save for a deposit or pay off my HECS.”
Ms Rodrigues finished studying media and design at the University of NSW in 2023.
“In an ideal world student debt could be wiped but … we’ll take anything at this point,” she said.
While Ms Rodrigues said she was “really grateful” for the anticipated cuts, she said it “offsets” some of the fee increases introduced — particularly in her art and design subjects.
“[It] just brings us back to where we started, instead of actually being an additional helping hand,” Ms Rodrigues said.
Guy Suttner
Guy Suttner, 25, was impacted by the Job-ready Graduates Package — which came into effect under the former Coalition government in 2021 — as it increased the fees for some degrees, like arts.
“The cost of university has increased so much and nothing is really being done to address that fundamental problem,” Mr Suttner said.
He graduated from an arts and law degree in May at the University of NSW.
Mr Suttner said the 20 per cent reduction on debts “only affects a small group of students” and does not benefit “a student starting [uni] today”.
“It kind of feels like students are often used as a political pawn,” he said.
When it was announced HECS debts would be indexed by 7.1 per cent in June 2023, Mr Suttner decided to contribute $20,000 from his savings to his HECS debt — which was about $50,000 — before indexation was applied.
“I think I almost instantly regretted paying it back … I just realised I had no savings and that I’d spent it all on [my HECS].
“I was at points really broke, I was skipping doctors appointments and paying rent late,” he said.
However, Mr Suttner still had close to two years of study to go, and his debt “accrued even more”.
“It went back up to $48,000 by the end of my degree.”
Zara Ishka
Zara Ishka, 21, tried to bring her HECS debt down while she was studying and paid $10,000 in March this year.
“I was trying to avoid having to repay more in the future, I just wanted to reduce the amount,” Ms Ishka said.
“It freaks me out sometimes, my parents did not have to pay this much, my mum got to go to uni for free.”
Enrolled in her final year of a bachelor of arts at the University of Sydney, Ms Ishka said it was “really frustrating” when the 20 per cent cut was announced.
Since Ms Ishka was young, her parents “pre-emptively” saved money to put towards her education and gathered interest on a savings account for about 20 years.
This formed part of the $10,000 paid earlier in the year, leaving Ms Ishka feeling “upset”.
She said she expects her HECS will go up to around $20,000 by the time she graduates.
She had deliberately selected subjects with lower fees where possible.
“I’m definitely not doing masters because it’s too expensive. I might consider honours, but it’s just a lot of money.”
Arnav Gupta
Arnav Gupta has contributed about $3,000 of scholarship money every semester to his fees which are about $9,000.
“I definitely wanted to chip away at it … so any contribution I could make each semester; I wanted to minimise how much is indexed,” Mr Gupta said.
Mr Gupta is in his fourth year of a five-year civil engineering and design in architecture degree at the University of Sydney.
“There’s so much uncertainty around: ‘Do I pay it off? Do I not?'”
He said the government’s 20 per cent reduction is a “one-off” and would be more “sustainable” for students if there was an annual cut.
“I’m still studying and [my HECS debt is] just going to keep increasing and so obviously it’s been used as a political tool that Labor’s used to get more votes,” Mr Gupta said.
“We’ve got this debt that’s constantly racking up.”
His aim is to have paid off as much of his HECS debt as possible once he is graduated and working full time, so that he can save up for a home.
Chloe Tam
Chloe Tam, 24, said “in the grand scheme of things” the 20 per cent cut does not have a major impact on her.
“It seems a bit more like a band-aid, appease-the-masses, approach,” Ms Tam said.
She paid some of her HECS debt off with scholarship money and had taken out two HELP loans for overseas study before she graduated from a physiotherapy degree at Western Sydney University in 2022.
With approximately $26,000 in HECS debt left, Ms Tam chose to not make any further repayments on top of her compulsory contributions.
“The government is changing all the time, so they promise all these different things and whether we get it or not is a different story,” she said.
While she said the reduction would be more helpful for those with six-digit HECS debts, she said it is “not necessarily a sustainable solution”.
“I think this 20 per cent discount kind of just feels like, ‘Oh hey, here’s a $20 food voucher so you can eat one meal’.”
Sandra Kallarakkal
Sandra Kallarakkal, 24, was focused on repaying as much of her HECS as possible after she graduated.
“I didn’t like the idea of having debt over my head,” she said.
Ms Kallarakkal made an advanced payment of about $11,000 in November last year on her HECS debt.
She used some scholarship money to make part of the payment and has aimed to pay her remaining $16,000 of HECS debt by the end of 2026.
Ms Kallarakkal studied for five years at the University of Sydney and completed her education and arts degree in 2024.
“You’re not really making a very big dent, even with the compulsory repayments,” she said.
While Ms Kallarakkal said she appreciated the 20 per cent reduction, she felt it would not have “a big impact for me personally”.
“It’s just a one-off 20 per cent reduction [and] with indexation … it’s still going to increase year after year,” she said.
However, she said it has been easier for her to save up for larger repayments given her decision to stay at home with her family.
Peter Chen is a senior lecturer in governance and international relations at the University of Sydney.
He said the 20 per cent reduction on HECS debts is “a small saving … in comparison to the average home deposit”.
“It really doesn’t address the fundamental inequalities within the HECS system at all and to some extent its one-off nature really underlines that,” Mr Chen said.
He questioned whether university will still have a “return on investment” in the future.
“The absolute benefit of higher education in purely financial terms might be declining,” Mr Chen said.
While HECS debt has “continued to grow and grow”, he said there is a “broader issue” at hand.
He questioned if young voters would remember this reduction by the current government when the next federal election rolls around.
“[It’s] largely a bit of a token policy that’s been thrown at young people instead of doing something that’s substantial,” Mr Chen said.