June 2, 2025 • 12 mins
You may remember that the Government promised to take 20% off student loans if they won the election. So, why did everyone’s HECS debts just increase? In today’s podcast, we’ll explain how HECS works, why it exists, and when the Government will be able to take action on its discount promise.
Hosts: Lucy Tassell and Zara Seidler
Producer: Orla Maher
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Already and this is this is the daily This is
the Daily OS. Oh, now it makes sense. Good morning
and welcome to the Daily OS. It's Tuesday, the third
of June. I'm Lucy Tassel.
Speaker 2 (00:19):
I'm Zara Sidler.
Speaker 1 (00:21):
If you haven't checked your Ato account recently, I've got
news for you. Over the weekend, your hextet went up
by three point two percent.
Speaker 2 (00:28):
Which is bringing everyone the good news. Good news, Tuesday morning,
good good news.
Speaker 1 (00:32):
But wait, I hear you ask, didn't the government promise
to take twenty percent off my debt after the election.
In today's podcast, we'll explain how and why Hex works
and how this planned discount is going to take effects. Zara.
Over this weekend, I spent a bit of time talking
to my friends about our Hex debts.
Speaker 2 (00:54):
Yep, so did I. I don't think you're alone there.
It was the topic of conversation for many young people.
Speaker 1 (00:59):
Yeah.
Speaker 2 (01:00):
Yes, and that's because our Hex's debts went up. They
went over the weekend, as you said. Plus there's also
the question I think that naturally follows on every time
we see that increase, which is why are we paying
off these loans when generations before us got university for free.
Speaker 1 (01:17):
Exactually, someone who got university for free was Prime Minister
Anthony Albanisi. And that is because there was once a
time from nineteen seventy four to nineteen eighty nine when
the government subsidized the cost of unique degrees.
Speaker 2 (01:31):
I thought it was longer, if I'm to be honest,
I didn't realize it was that short.
Speaker 1 (01:35):
It is short. I wonder if it's because there's so
many people who benefited from that era who went on
to go into public life.
Speaker 2 (01:42):
Yeah, there are a lot of.
Speaker 1 (01:43):
People in Parliament right now that.
Speaker 2 (01:45):
Age it would check out.
Speaker 1 (01:46):
Yeah, that makes sense, including of course the Prime Minister. Now,
while this was great for students of that era, it
has also been argued that this was an unfair burden
on taxpayers.
Speaker 2 (01:57):
Can you just unpack that? Why is free university unfair
for tax payers?
Speaker 1 (02:01):
Yeah? Our taxes are one of the main ways the
government makes money. It's not the only way, but it's
a big contributor. Some people would argue that when the
government says it's making something free, it's not really free
because one of the ways that the government gets money
is via USA so taxpayer exactly. So an example of
this is the Medicare levee. It's part of the taxes
(02:23):
that you pay. It's calculated at two percent of your
overall income. The argument in favor of this is that
everyone who pays taxes pays a tiny fraction of the whole,
and then this being allowed to fund something like Medicare,
it is argued, ends up benefiting us more than we
end up paying. When the Bob Hawk government came to
(02:44):
power in the early eighties, so in the middle of
this program, it believed the government could not keep spending
as much as it had on places at university because
in effect, government spending is in some way you're spending.
So by the government subsidizing these free, unique places, they
were finding that they didn't want to be spending quite
(03:06):
as much of taxpayer money when the government has many
things to pay for. Then in nineteen eighty nine, we
have a new system. It's called the Higher Education Contribution
Scheme or HEX. The Education minister at the time was
a guy named John Dawkins, and here's a little bit
of what he said when he was introducing the bills
of Parliament that would then kind of make this scheme happen.
(03:27):
He said, people who benefit from higher education will be
required to make a small contribution towards the cost of
their study. The key features of the contribution scheme are
an annual course charge of eighteen hundred dollars per year
of equivalent full time study, payment arrangements based on personal
capacity to pay, and a choice between lumpsom payment with
(03:48):
a fifteen percent discount or payment through the taxation system
once a person's income reaches around the level of average
earnings in the Australian workforce. He also noted the payments
would be indexed to keep pace with inflation.
Speaker 2 (04:04):
Okay, so I just want to recap where we are at.
So for a period of time, university was free for
students who were attending, and that's because the government was
subsidizing the cost of that, and that money was raised
through tax payers. We were ultimately in one very big
circle all paying for that to occur. When Bob Hoork
(04:27):
came to power, he said, we're spending too much on this.
We are going to implement a new scheme as we
now understand it to be the hex scheme. Yes, and
from nineteen eighty nine onwards that scheme has been the
dominant way that people take out a loan for higher
Education study. Yes, is that right?
Speaker 1 (04:45):
That's correct?
Speaker 2 (04:45):
Okay, you passed. So then you did say at the
end there that the education minister at the time called
it a contribution. I believe a small contribution, is what
you said. A lot of our listeners who have HEX,
maybe they have a double degree, not call it a
small contribution. Yes, talk me through that thinking.
Speaker 1 (05:05):
Yeah. So, even though in this podcast and in life
we all call our student debts HEX, scheme is actually
called the Higher Education Loan Program HELP, so you might
hear it referred to as HEX help or help.
Speaker 2 (05:18):
It was like only upon entering this job that I
thought about the fact that it was an AGX. I
just always thought there was like a HEX on your
home anywake it going, Dan.
Speaker 1 (05:29):
It was only when I started this job that I
realized it had been called help since I was in
year three. But there you go, no matter. The reason
for this is because of changes made to the system
under the Howard government. Okay, there were many different kinds
of changes, but basically more kinds of debts were included
in the scheme. Different kinds of schools, different kinds of programs,
and different degrees were able to cost different amounts. Changing
(05:53):
from that original eighteen hundred dollars fee.
Speaker 2 (05:56):
Okay, So under Howard there were changes to the way
system works.
Speaker 1 (06:00):
Yes, so it became more of a loan and less
of a contribution, reflected in the name of the scheme.
Speaker 2 (06:07):
We'll be back with the rest of today's deep dive
after a quick message from our sponsor.
Speaker 1 (06:14):
But in a lot of other senses, the original plan
is still the case all those things I outlined. So
your repayments are based on how much you earn, that's
still true. You begin paying once you meet a certain threshold.
That's still true. And the amount that you owe is indexed,
which everyone would remember from a couple of years ago,
is still very much true. And that's what happened this
(06:34):
past weekend.
Speaker 2 (06:35):
That was an excellent segue into the news of the day,
which is, of course that our hex set went up
due to indexation. Can you just talk our listeners through
how indexation is calculated and what it's based on.
Speaker 1 (06:50):
Basically, the idea of indexation is that your debt should
increase with the value of money to reflect the actual
value of money. This time, debts not by three point
two percent based on the rate of inflation that's rising prices.
This is historically what it's been based on. As I mentioned,
John Dorkin said it should be based on the rate
of inflation. But as we would remember, our hex stets
(07:12):
jumped up by seven point one percent in June twenty
twenty three.
Speaker 2 (07:17):
Hearing that it's just unbelievable.
Speaker 1 (07:19):
Yes, because inflation was so high at the time. And
at that time the government passed a new law changing
the rules, and that meant that indexation would be based
on whichever is the lower of inflation or how much
wages have risen by, So that's the wage price index.
Speaker 2 (07:39):
So until that time it had always been pegged to
the rate of inflation, but because inflation was so high,
there had to be an alternative here, Yes, and they.
Speaker 1 (07:47):
Went back and applied the new rate of indexation to
those to that increase from June twenty twenty three. And
now again the government is planning to change the rules
in another sense by promising to discount student debts.
Speaker 2 (08:03):
I think this is where a bit of confusion, and
I'd say rightly so has kicked in for our listeners
and for TDA readers, because throughout the election, the big
pitch to young voters, especially from labor was we are
going to cut your hextet by twenty percent, and now
that indexation has kicked in, our debt has gone up.
(08:25):
A lot of people are saying, well, I thought it
was getting cut. So can you just explain to us
when does that actually happen or how does it happen.
Speaker 1 (08:34):
Yeah, it's all about timing. The first thing to know
is that the discount can't happen until Parliament sits again.
But it's not doing that until the end of July.
The government has, as we know, a really big majority
in the lower House. It will own.
Speaker 2 (08:47):
Huge majority, the biggest ever.
Speaker 1 (08:50):
In fact, it will only need to negotiate with the
Greens or the coalition to pass the bill and the
Upper House. Now we don't know for sure, but we
know that the Greens policy is that all student debts
should be wiped, so I think we could suggest that
they would be open to negotiating with the government. I
haven't called them up to ask, but I think we
will hear from them again ahead of parliament sitting. Then
(09:14):
if slash when the bill.
Speaker 2 (09:15):
Passes, what you're saying is very likely.
Speaker 1 (09:18):
Yes, And the government also, I should note, has said
they want to do this as soon as possible.
Speaker 2 (09:22):
Yeah, as their first kind of action.
Speaker 1 (09:24):
Item if SLASH. When it passes, the reduction will be
applied automatically by the ATO. It will apply to the
amount of your loan before indexation. If you pay it
off in between indexation, so now and the end of
the financial year this month, you will get the discount
rebated in your tax return, assuming you get a return
(09:45):
and not a bill. The indexation applied this weekend will
then be recalculated based on the new reduced loan amount.
So I think it's time to do a bit of maths.
Speaker 2 (09:55):
Please. Unfortunately, let's hold hands and do it together.
Speaker 1 (10:00):
So say you have a loan of ten thousand dollars.
As of this weekend, your debt went up three point
two percent to ten thousand, three hundred and twenty dollars.
When the discount comes into effect, it reduces your pre
indexation debt to eight thousand dollars, and then the indexation
is recalculated and reapplied, so your final result will be
(10:23):
eight thousand, two hundred and fifty six dollars.
Speaker 2 (10:26):
And can I just jump in here, so no one
has to actually do anything, yes, In order to access
that cut.
Speaker 1 (10:33):
It happens automatical. Okay, all right, and then again, as
I said, the government has committed to bringing it forward
basically as soon as they walk into the House of Representatives,
so we could be seeing it fairly soon.
Speaker 2 (10:43):
Yeah, really interesting there, Lucy. Before we go, I do
just want to ask is the government planning to change
anything else about our hex system, because you said that
they've already changed the way that indexation is pegged or
what's pegged. Two, are there any other changes coming down
the line that we know about.
Speaker 1 (11:01):
There's one more thing they want to change, which is
raising the threshold of when you need to start paying
it back. So right now you need to be earning
fifty one thousand, five hundred dollars a year to begin
repaying your debt, and the government wants to increase that
to sixty seven thousand dollars per year, which is quite
a jump. Yeah.
Speaker 2 (11:18):
Yeah, well I have to wait and see. The government
has a big agenda of election commitments, and as we
have said many times before, it's as important to hold
the government to account post election as it is during
an election period. So we will be keeping track of
those commitments and if and when they come to fruition.
Thanks for explaining, Lissie, Thanks Sarah, and thank you for
(11:39):
joining us for another episode of The Daily Os. We
will of course be back later today with your afternoon headlines,
but until then, have a good day.
Speaker 1 (11:50):
My name is Lily Madden and I'm a proud Arunda
bunge Lung Kalgotin woman from Gadigal Country. The Daily Os
acknowledges that this podcast is recorded on the land of
the Gadigal people and pays respect to all Aboriginal and
Torrestrate island and nations. We pay our respects to the
first peoples of these countries, both past and present.
Already and this is this is the daily This is
the Daily OS. Oh, now it makes sense. Good morning
and welcome to the Daily OS. It's Tuesday, the third
of June. I'm Lucy Tassel.
Speaker 2 (00:19):
I'm Zara Sidler.
Speaker 1 (00:21):
If you haven't checked your Ato account recently, I've got
news for you. Over the weekend, your hextet went up
by three point two percent.
Speaker 2 (00:28):
Which is bringing everyone the good news. Good news, Tuesday morning,
good good news.
Speaker 1 (00:32):
But wait, I hear you ask, didn't the government promise
to take twenty percent off my debt after the election.
In today's podcast, we'll explain how and why Hex works
and how this planned discount is going to take effects. Zara.
Over this weekend, I spent a bit of time talking
to my friends about our Hex debts.
Speaker 2 (00:54):
Yep, so did I. I don't think you're alone there.
It was the topic of conversation for many young people.
Speaker 1 (00:59):
Yeah.
Speaker 2 (01:00):
Yes, and that's because our Hex's debts went up. They
went over the weekend, as you said. Plus there's also
the question I think that naturally follows on every time
we see that increase, which is why are we paying
off these loans when generations before us got university for free.
Speaker 1 (01:17):
Exactually, someone who got university for free was Prime Minister
Anthony Albanisi. And that is because there was once a
time from nineteen seventy four to nineteen eighty nine when
the government subsidized the cost of unique degrees.
Speaker 2 (01:31):
I thought it was longer, if I'm to be honest,
I didn't realize it was that short.
Speaker 1 (01:35):
It is short. I wonder if it's because there's so
many people who benefited from that era who went on
to go into public life.
Speaker 2 (01:42):
Yeah, there are a lot of.
Speaker 1 (01:43):
People in Parliament right now that.
Speaker 2 (01:45):
Age it would check out.
Speaker 1 (01:46):
Yeah, that makes sense, including of course the Prime Minister. Now,
while this was great for students of that era, it
has also been argued that this was an unfair burden
on taxpayers.
Speaker 2 (01:57):
Can you just unpack that? Why is free university unfair
for tax payers?
Speaker 1 (02:01):
Yeah? Our taxes are one of the main ways the
government makes money. It's not the only way, but it's
a big contributor. Some people would argue that when the
government says it's making something free, it's not really free
because one of the ways that the government gets money
is via USA so taxpayer exactly. So an example of
this is the Medicare levee. It's part of the taxes
(02:23):
that you pay. It's calculated at two percent of your
overall income. The argument in favor of this is that
everyone who pays taxes pays a tiny fraction of the whole,
and then this being allowed to fund something like Medicare,
it is argued, ends up benefiting us more than we
end up paying. When the Bob Hawk government came to
(02:44):
power in the early eighties, so in the middle of
this program, it believed the government could not keep spending
as much as it had on places at university because
in effect, government spending is in some way you're spending.
So by the government subsidizing these free, unique places, they
were finding that they didn't want to be spending quite
(03:06):
as much of taxpayer money when the government has many
things to pay for. Then in nineteen eighty nine, we
have a new system. It's called the Higher Education Contribution
Scheme or HEX. The Education minister at the time was
a guy named John Dawkins, and here's a little bit
of what he said when he was introducing the bills
of Parliament that would then kind of make this scheme happen.
(03:27):
He said, people who benefit from higher education will be
required to make a small contribution towards the cost of
their study. The key features of the contribution scheme are
an annual course charge of eighteen hundred dollars per year
of equivalent full time study, payment arrangements based on personal
capacity to pay, and a choice between lumpsom payment with
(03:48):
a fifteen percent discount or payment through the taxation system
once a person's income reaches around the level of average
earnings in the Australian workforce. He also noted the payments
would be indexed to keep pace with inflation.
Speaker 2 (04:04):
Okay, so I just want to recap where we are at.
So for a period of time, university was free for
students who were attending, and that's because the government was
subsidizing the cost of that, and that money was raised
through tax payers. We were ultimately in one very big
circle all paying for that to occur. When Bob Hoork
(04:27):
came to power, he said, we're spending too much on this.
We are going to implement a new scheme as we
now understand it to be the hex scheme. Yes, and
from nineteen eighty nine onwards that scheme has been the
dominant way that people take out a loan for higher
Education study. Yes, is that right?
Speaker 1 (04:45):
That's correct?
Speaker 2 (04:45):
Okay, you passed. So then you did say at the
end there that the education minister at the time called
it a contribution. I believe a small contribution, is what
you said. A lot of our listeners who have HEX,
maybe they have a double degree, not call it a
small contribution. Yes, talk me through that thinking.
Speaker 1 (05:05):
Yeah. So, even though in this podcast and in life
we all call our student debts HEX, scheme is actually
called the Higher Education Loan Program HELP, so you might
hear it referred to as HEX help or help.
Speaker 2 (05:18):
It was like only upon entering this job that I
thought about the fact that it was an AGX. I
just always thought there was like a HEX on your
home anywake it going, Dan.
Speaker 1 (05:29):
It was only when I started this job that I
realized it had been called help since I was in
year three. But there you go, no matter. The reason
for this is because of changes made to the system
under the Howard government. Okay, there were many different kinds
of changes, but basically more kinds of debts were included
in the scheme. Different kinds of schools, different kinds of programs,
and different degrees were able to cost different amounts. Changing
(05:53):
from that original eighteen hundred dollars fee.
Speaker 2 (05:56):
Okay, So under Howard there were changes to the way
system works.
Speaker 1 (06:00):
Yes, so it became more of a loan and less
of a contribution, reflected in the name of the scheme.
Speaker 2 (06:07):
We'll be back with the rest of today's deep dive
after a quick message from our sponsor.
Speaker 1 (06:14):
But in a lot of other senses, the original plan
is still the case all those things I outlined. So
your repayments are based on how much you earn, that's
still true. You begin paying once you meet a certain threshold.
That's still true. And the amount that you owe is indexed,
which everyone would remember from a couple of years ago,
is still very much true. And that's what happened this
(06:34):
past weekend.
Speaker 2 (06:35):
That was an excellent segue into the news of the day,
which is, of course that our hex set went up
due to indexation. Can you just talk our listeners through
how indexation is calculated and what it's based on.
Speaker 1 (06:50):
Basically, the idea of indexation is that your debt should
increase with the value of money to reflect the actual
value of money. This time, debts not by three point
two percent based on the rate of inflation that's rising prices.
This is historically what it's been based on. As I mentioned,
John Dorkin said it should be based on the rate
of inflation. But as we would remember, our hex stets
(07:12):
jumped up by seven point one percent in June twenty
twenty three.
Speaker 2 (07:17):
Hearing that it's just unbelievable.
Speaker 1 (07:19):
Yes, because inflation was so high at the time. And
at that time the government passed a new law changing
the rules, and that meant that indexation would be based
on whichever is the lower of inflation or how much
wages have risen by, So that's the wage price index.
Speaker 2 (07:39):
So until that time it had always been pegged to
the rate of inflation, but because inflation was so high,
there had to be an alternative here, Yes, and they.
Speaker 1 (07:47):
Went back and applied the new rate of indexation to
those to that increase from June twenty twenty three. And
now again the government is planning to change the rules
in another sense by promising to discount student debts.
Speaker 2 (08:03):
I think this is where a bit of confusion, and
I'd say rightly so has kicked in for our listeners
and for TDA readers, because throughout the election, the big
pitch to young voters, especially from labor was we are
going to cut your hextet by twenty percent, and now
that indexation has kicked in, our debt has gone up.
(08:25):
A lot of people are saying, well, I thought it
was getting cut. So can you just explain to us
when does that actually happen or how does it happen.
Speaker 1 (08:34):
Yeah, it's all about timing. The first thing to know
is that the discount can't happen until Parliament sits again.
But it's not doing that until the end of July.
The government has, as we know, a really big majority
in the lower House. It will own.
Speaker 2 (08:47):
Huge majority, the biggest ever.
Speaker 1 (08:50):
In fact, it will only need to negotiate with the
Greens or the coalition to pass the bill and the
Upper House. Now we don't know for sure, but we
know that the Greens policy is that all student debts
should be wiped, so I think we could suggest that
they would be open to negotiating with the government. I
haven't called them up to ask, but I think we
will hear from them again ahead of parliament sitting. Then
(09:14):
if slash when the bill.
Speaker 2 (09:15):
Passes, what you're saying is very likely.
Speaker 1 (09:18):
Yes, And the government also, I should note, has said
they want to do this as soon as possible.
Speaker 2 (09:22):
Yeah, as their first kind of action.
Speaker 1 (09:24):
Item if SLASH. When it passes, the reduction will be
applied automatically by the ATO. It will apply to the
amount of your loan before indexation. If you pay it
off in between indexation, so now and the end of
the financial year this month, you will get the discount
rebated in your tax return, assuming you get a return
(09:45):
and not a bill. The indexation applied this weekend will
then be recalculated based on the new reduced loan amount.
So I think it's time to do a bit of maths.
Speaker 2 (09:55):
Please. Unfortunately, let's hold hands and do it together.
Speaker 1 (10:00):
So say you have a loan of ten thousand dollars.
As of this weekend, your debt went up three point
two percent to ten thousand, three hundred and twenty dollars.
When the discount comes into effect, it reduces your pre
indexation debt to eight thousand dollars, and then the indexation
is recalculated and reapplied, so your final result will be
(10:23):
eight thousand, two hundred and fifty six dollars.
Speaker 2 (10:26):
And can I just jump in here, so no one
has to actually do anything, yes, In order to access
that cut.
Speaker 1 (10:33):
It happens automatical. Okay, all right, and then again, as
I said, the government has committed to bringing it forward
basically as soon as they walk into the House of Representatives,
so we could be seeing it fairly soon.
Speaker 2 (10:43):
Yeah, really interesting there, Lucy. Before we go, I do
just want to ask is the government planning to change
anything else about our hex system, because you said that
they've already changed the way that indexation is pegged or
what's pegged. Two, are there any other changes coming down
the line that we know about.
Speaker 1 (11:01):
There's one more thing they want to change, which is
raising the threshold of when you need to start paying
it back. So right now you need to be earning
fifty one thousand, five hundred dollars a year to begin
repaying your debt, and the government wants to increase that
to sixty seven thousand dollars per year, which is quite
a jump. Yeah.
Speaker 2 (11:18):
Yeah, well I have to wait and see. The government
has a big agenda of election commitments, and as we
have said many times before, it's as important to hold
the government to account post election as it is during
an election period. So we will be keeping track of
those commitments and if and when they come to fruition.
Thanks for explaining, Lissie, Thanks Sarah, and thank you for
(11:39):
joining us for another episode of The Daily Os. We
will of course be back later today with your afternoon headlines,
but until then, have a good day.
Speaker 1 (11:50):
My name is Lily Madden and I'm a proud Arunda
bunge Lung Kalgotin woman from Gadigal Country. The Daily Os
acknowledges that this podcast is recorded on the land of
the Gadigal people and pays respect to all Aboriginal and
Torrestrate island and nations. We pay our respects to the
first peoples of these countries, both past and present.
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