The recent outbreak of high inflation means millions of Australians with student loan debts are facing a 7.1% increase in June.
This is because Help debts (and Hecs, and some other student loans) are re-indexed every financial year using a formula based on the cost of living index.
Relatively recent changes to the Help repayment thresholds mean that when the indexation rate is above 1%, people on low incomes can be making payments that are less than the amount added by indexation – meaning some people see their debt rise despite making compulsory payments.
Here, you can use this interactive model to see how indexation affects a Help debt over 10 years from 2013 using actual payment thresholds, given a starting debt and a starting income. The income is increased each year using an average for wage growth over the past decade.
This next calculator will tell you by how much your debt will increase in June, and will give you an estimate for how long it will take you to pay off your Help debt.
It is important to note that this is a simple model which is heavily dependent on the values set for wage growth and inflation. You can change these values if you think your wage growth is likely to be above average, or if you think inflation is likely to remain higher than it has been in the past.
You can read more about the current situation with student debt and inflation here.
