From 1 June 2023, there will be a significant increase in the Higher Education Loan Program (HELP) repayment indexation rate from 3.9% to 7.1% (See: Indexation rate table).
The Australian Government adjusts the outstanding HELP debt in accordance with the inflation rate. This adjustment is known as indexation and, with inflation steadily rising, so too will your debt.
For example, if you have a $20,000 HELP debt, this will increase by $1,420 on 1 June 2023. As indexation is applied annually, if the debt is cleared prior to then, no indexation for 2023 will occur.
If clearing the debt is not an option for you right now, there are ways to reduce the impact going forward:
- Chip away at your debt: By making extra repayments whenever you can, you can gradually reduce your HELP debt. Even small additional payments can make a significant difference over time and help you avoid paying even more
- Prioritize lump-sum payments: If you happen to have some savings or receive a bonus, think about making a lump-sum payment towards your HELP debt. This can substantially reduce the balance and minimize the impact of the higher indexation rate.
We strongly suggest that you review your current HELP debt and speak with your BBB Adviser to determine the best course of action for you. If you have a smaller balance, or if the mandatory annual repayment would clear the debt, we implore you to do so prior to 1 June 2023.
