Psychology graduate Amy Jolliffe grew up in a housing commission home believing university would be her ticket to a better life.
“Growing up in poverty and seeing how my mum struggled, I placed a lot of importance on education,” she said.
“It’s been the opposite. I now wish that I dropped out of school when I was 15.”
After getting a double degree and racking up $64,000 in HECS debt — more than twice the average of $26,494 — Ms Jolliffe has given up on her dream.
Each year, her debt increases in line with inflation. Last year, when HECS debts increased by a record high of 7.1 per cent, her debt grew by more than $3,600.
“My debt is relatively high, the problem with it now though is … even though I pay it back with my tax, I’m only paying back the interest so it feels like I’ll never pay the debt back,” Ms Jolliffe said.
Every June, the federal government bumps up HECS debts by a few percentage points to keep the amount in line with inflation — a process called indexation.
Last year’s increase of 7.1 per cent was the largest since 1990.
And with another large indexation hike looming on June 1, Ms Jolliffe became emotional as she told ABC News she was considering leaving the country and falling back on her scuba diving hobby.
“I’ve reached a point where I feel I could just get on a plane and fly to Mexico and become a scuba diving instructor and just live my dream and leave this behind me,” Ms Jolliffe said.
“I’m feeling completely overwhelmed and disillusioned. I’m feeling hopeless about my future.”
How big will the next HECS indexation rise be?
ABC News can reveal HECS debts are forecast to rise between 4.2 and 4.8 per cent this year, the second-highest increase in a decade.
For the average student debt of $26,494, that is an increase of between $1,113 and $1,272.
The likely indexation figures, calculated by the Parliamentary Library for the Greens, also estimate that HECS debts would have risen between 15.95 per cent and 16.62 per cent during the government’s three years in office.
“It’s getting harder and harder to put food on the table, to pay for healthcare costs, to even pay rent,” Greens deputy leader Senator Mehreen Faruqi said.
“Add on top of that, the burden of the student debt crisis, which is actually stopping people from entering the housing market.
“It is stopping people from having families and it is really crushing dreams of going to university or doing further study.”
To become accredited in her chosen field of community mental health, Ms Jolliffe would need to complete a Master in Psychology or social work.
Both would require hundreds of hours of unpaid placement hours, making it even harder to keep up with the rising HECS debt.
“I work in retail and community services and I’m struggling now to keep my car on the road, keep my bills paid, a roof over my head, food on the table,” she said.
“I can’t even fathom doing that many placement hours. When would I work? In my sleep?”
The Greens say the increased HECS debts over the last three years are leaving graduates with significantly higher debts at a time when budgets are already stretched.
“Someone with an average [student] debt of $26,000 will face a rise of $4,000 in just the first term of the Labor government,” Senator Faruqi said.
The final annual HECS indexation number will be calculated after the March inflation figures are published later this month.
Momentum for changes to HECS builds
Even if the indexation is at the higher end, the 2.95 million Australians with debt will not necessarily feel the pain when the figure is calculated on June 1.
Students don’t need to start paying off their HECS-HELP debts until their earnings reach $51,500.
Mandatory payments then range from 1 per cent of a debtor’s salary to a high of 10 per cent, though voluntary repayments can be made at any time.
The government applies indexation based on the consumer price indexation (CPI) each year on June 1.
It said it does this to maintain the value of the loan and for many years, CPI was very low.
But with the cost-of-living crisis, calls for reform have grown.
Among them is to change indexation so it is the lower number of either CPI or Average Weekly Earnings so increases to debt are not higher than pay rises.
As indexation looms, a petition from Teal MP Dr Monique Ryan calling for this change has more than 250,000 signatures.
Shadow Education Minister Senator Sarah Henderson has called for changes to HECS indexation too.
And on top of those calls for change, the federal government’s review of higher education — called the Universities Accord — also endorsed reforms to indexation.
It is increasingly likely there will be relief in the budget.
In a statement, Federal Education Minister Jason Clare recognised calls to make HECS “simpler and fairer”.
“The Australian Universities Accord said the HECS-HELP system can be made simpler and fairer, including around how indexation is calculated and applied,” Mr Clare said.
“The government will respond to the accord’s recommendations shortly. In the years ahead, we need more people to get a crack at going to uni and TAFE.
“That’s what our response to the Universities Accord will be all about.”
Any changes to HECS/HELP would require selling the reforms to taxpayers who do not go to university and who, on average, earn less as a result.
