Thousands of students will have part of their HECS/HELP debt waived due to a booking error by the Australian Taxation Office (ATO).
About 13,748 individuals were affected by delayed HECS loan records from 104 institutions.
The department said it had been working with universities since the start of the year to “correct records for current and former higher education students whose loan records had not transferred to the Australian Taxation Office (ATO) due to missing information”.
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“To ensure affected individuals are not unfairly financially disadvantaged the Australian Government will waive annual indexation on the delayed loans for previous years and 2023,” a spokesperson for the Department of Education told 7NEWS.com.au.
This was valued at a total of $74 million, which will be waived.
The information mostly relates to missing student Tax File Numbers and errors linked to the application of the upfront loan discount, the spokesperson added.
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Those who have been affected will be contacted by the department.
“We have been contacting affected individuals to ensure they are aware of the issue and understand the support options available to them,” they said.
It comes as the indexation rate was raised to 7.1 per cent this year.
That means, for someone with the average loan of $24,770, their debt increased by more than $1750.
However, in 2023, the income level at which debt repayment begins also rose.
Last financial year, those earning more than $48,361 had to make compulsory payments.
But this year, graduates who earn $51,550 or more will need to make a compulsory repayment.
H&R Block director of tax communications Mark Chapman told 7NEWS.com.au the changes are normal indexation-linked changes to the repayment thresholds.
“If you have the same income in 2023-24 as you did in 2022-23, you will generally fall back by one repayment band which means that you will have a slightly lower compulsory payment,” he said.
However, many people won’t have the same income this year.
“If you got a pay rise which was linked to inflation, you won’t be any better off,” Chapman said.
“And the rate of loan indexation has also gone up because it is also linked to the inflation rate — this year, your outstanding loan balance will go up by an eye-watering 7.1 per cent and the rate of indexation is expected to continue to be high next year.”
This means, over the long-term graduates may find themselves worse off with a lower repayment simply not making inroads into paying off a higher loan balance.
Students can also find more information on the Department of Education’s website.
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