1 00:00:00,520 --> 00:00:05,640 Speaker 1: Already and this is the Daily This is the Daily OS. Oh, 2 00:00:05,800 --> 00:00:15,880 Speaker 1: now it makes sense. Good morning and welcome to the 3 00:00:15,960 --> 00:00:18,400 Speaker 1: Daily OS. It's Sunday, the sixteenth or February. 4 00:00:18,520 --> 00:00:19,759 Speaker 2: I'm Billy, I'm Sarah. 5 00:00:19,960 --> 00:00:22,119 Speaker 1: It's not normal that we're always here on a Sunday. 6 00:00:22,280 --> 00:00:23,520 Speaker 2: I know what a pleasure. 7 00:00:23,800 --> 00:00:25,880 Speaker 1: It's a pleasure and a privilege to be in your 8 00:00:25,920 --> 00:00:29,560 Speaker 1: ears on this Sunday. Now, last year the government legislated 9 00:00:29,600 --> 00:00:32,239 Speaker 1: a change to help and other student loans, and that 10 00:00:32,440 --> 00:00:35,720 Speaker 1: change is now coming into effect. So with that in mind, 11 00:00:35,920 --> 00:00:38,360 Speaker 1: we thought it was the perfect time for a classic 12 00:00:38,440 --> 00:00:41,920 Speaker 1: TDA explainer breaking down everything you need to know about 13 00:00:41,960 --> 00:00:45,400 Speaker 1: your student loan and more importantly, how this change will 14 00:00:45,440 --> 00:00:51,280 Speaker 1: affect you. So Zara recently on our Instagram stories on 15 00:00:51,280 --> 00:00:53,880 Speaker 1: the Daily OS, we asked what the audience wanted to 16 00:00:53,920 --> 00:00:57,319 Speaker 1: know about the recent change true student loans, and we 17 00:00:57,320 --> 00:01:01,400 Speaker 1: were inundated with questions. So today, on this Sunday, we 18 00:01:01,480 --> 00:01:03,360 Speaker 1: are giving you all of the answers. 19 00:01:03,600 --> 00:01:06,039 Speaker 2: What better day of the week a Sunday to talk 20 00:01:06,080 --> 00:01:06,440 Speaker 2: about this? 21 00:01:07,120 --> 00:01:09,280 Speaker 1: And just a quick note before we start that this 22 00:01:09,400 --> 00:01:13,080 Speaker 1: podcast is produced with financial support from the Australian Government, 23 00:01:13,200 --> 00:01:16,680 Speaker 1: but as always, this content has been produced by us 24 00:01:16,800 --> 00:01:19,000 Speaker 1: using our normal editorial processes. 25 00:01:19,360 --> 00:01:21,640 Speaker 2: With that out of the way, Billy, let's get straight 26 00:01:21,680 --> 00:01:24,480 Speaker 2: into student loans. So let's just set it up. I 27 00:01:24,480 --> 00:01:28,280 Speaker 2: guess when someone begins a university course, they can either 28 00:01:28,319 --> 00:01:31,560 Speaker 2: pay up front or they can access a loan from 29 00:01:31,640 --> 00:01:35,000 Speaker 2: the government. So since most degrees are tens of thousands 30 00:01:35,040 --> 00:01:37,520 Speaker 2: of dollars, then you get into double degree territory, and 31 00:01:37,640 --> 00:01:40,680 Speaker 2: you know you're looking a lot here. Most people do 32 00:01:40,800 --> 00:01:44,160 Speaker 2: tend to opt for a student loan. Now, I've always 33 00:01:44,240 --> 00:01:47,240 Speaker 2: known student loans to be referred to as heck. But 34 00:01:47,640 --> 00:01:50,280 Speaker 2: you did just open this podcast by talking about help, 35 00:01:50,480 --> 00:01:53,120 Speaker 2: which was a tad confusing to me. Which one is 36 00:01:53,200 --> 00:01:56,000 Speaker 2: right or what's the difference? I guess if they are different. 37 00:01:56,240 --> 00:01:58,360 Speaker 1: Okay, so both are right, and it just depends what 38 00:01:58,400 --> 00:02:01,440 Speaker 1: you're talking about. Think of help as kind of an 39 00:02:01,560 --> 00:02:06,520 Speaker 1: umbrella term that covers all government higher education loans, and 40 00:02:06,560 --> 00:02:09,600 Speaker 1: then HEX is just one of those loans that you 41 00:02:09,639 --> 00:02:12,840 Speaker 1: can get under the umbrella of help, And HEX is 42 00:02:12,880 --> 00:02:16,840 Speaker 1: the loan that most undergrad students at universities do use. 43 00:02:17,280 --> 00:02:20,560 Speaker 1: But for simplicity's sake, we'll be referring to it as help. 44 00:02:20,680 --> 00:02:22,720 Speaker 1: So we're going to be covering all student loans. 45 00:02:22,840 --> 00:02:25,880 Speaker 2: Okay, that makes sense to me. So help umbrella. He's 46 00:02:25,960 --> 00:02:27,480 Speaker 2: a specific form of that. 47 00:02:27,480 --> 00:02:29,560 Speaker 1: Help, which is the one that most of us would 48 00:02:29,600 --> 00:02:29,960 Speaker 1: have used. 49 00:02:30,880 --> 00:02:33,320 Speaker 2: Yeah, okay, cool. And just before we go any further, 50 00:02:33,480 --> 00:02:35,000 Speaker 2: I do want to ask you a question, because I 51 00:02:35,040 --> 00:02:37,600 Speaker 2: know it's on everyone, every young person's mind. It's what 52 00:02:37,639 --> 00:02:40,800 Speaker 2: their parents always tell them. Is it true that university 53 00:02:41,240 --> 00:02:42,400 Speaker 2: was once free? 54 00:02:42,600 --> 00:02:45,880 Speaker 1: It was so for our parents' generation, Like you said, 55 00:02:46,160 --> 00:02:49,519 Speaker 1: university was free. So that was from nineteen seventy four 56 00:02:49,960 --> 00:02:51,360 Speaker 1: to nineteen eighty nine. 57 00:02:51,600 --> 00:02:53,160 Speaker 2: That's actually shorter than I thought it was. 58 00:02:53,520 --> 00:02:55,079 Speaker 1: Yeah, how long is that you're going to make me 59 00:02:55,120 --> 00:02:57,480 Speaker 1: do maths? Like fifteen years? Yeah, fifteen years. 60 00:02:57,520 --> 00:02:59,519 Speaker 2: I kind of thought it was like a generational Yeah. 61 00:02:59,480 --> 00:03:03,440 Speaker 1: No, just fifteen years that students didn't need to pay 62 00:03:03,600 --> 00:03:07,120 Speaker 1: for their degrees. But then this system of student loans 63 00:03:07,240 --> 00:03:10,919 Speaker 1: was rolled out in nineteen eighty nine. And notably, there 64 00:03:10,960 --> 00:03:14,679 Speaker 1: are actually a lot more people going to university now 65 00:03:14,919 --> 00:03:17,880 Speaker 1: than there was when going to UNI was free. So, 66 00:03:17,960 --> 00:03:21,440 Speaker 1: in nineteen eighty nine, only eight percent of the working 67 00:03:21,440 --> 00:03:25,359 Speaker 1: age population had a university degree, and now it's thirty 68 00:03:25,400 --> 00:03:29,040 Speaker 1: two percent. Interesting, so there has been quite a considerable 69 00:03:29,080 --> 00:03:33,040 Speaker 1: increase there. And now obviously going to UNI now isn't free, 70 00:03:33,240 --> 00:03:37,080 Speaker 1: but the government shocked to all. But the government does 71 00:03:37,320 --> 00:03:40,920 Speaker 1: help by subsidizing some of the cost and then letting 72 00:03:40,960 --> 00:03:44,360 Speaker 1: you take out a help loan for the rest. And 73 00:03:44,400 --> 00:03:46,680 Speaker 1: now another thing to note is that you only need 74 00:03:46,720 --> 00:03:50,760 Speaker 1: to start repaying that loan once your income reaches a 75 00:03:50,800 --> 00:03:54,840 Speaker 1: certain point, and how much you repay each year is 76 00:03:54,920 --> 00:03:56,400 Speaker 1: dependent on your income. 77 00:03:56,760 --> 00:03:59,800 Speaker 2: And that point about repayments being dependent on your income 78 00:03:59,880 --> 00:04:02,480 Speaker 2: is a really important one that I don't know that 79 00:04:02,760 --> 00:04:04,800 Speaker 2: you know I necessarily told enough about. 80 00:04:05,040 --> 00:04:07,680 Speaker 1: No, there's no university course where you get taught about 81 00:04:07,680 --> 00:04:13,160 Speaker 1: this adulting. So at the moment, the minimum compulsory repayment threshold, 82 00:04:13,400 --> 00:04:16,320 Speaker 1: so that is the income that once you start earning 83 00:04:16,320 --> 00:04:20,480 Speaker 1: you have to start repaying your loan. That number is 84 00:04:20,560 --> 00:04:23,880 Speaker 1: fifty four, four hundred and thirty five. So if your 85 00:04:23,880 --> 00:04:26,920 Speaker 1: income is above that you're paying that means that you're 86 00:04:26,920 --> 00:04:30,440 Speaker 1: starting to repay. And then once you do start repaying it, 87 00:04:30,760 --> 00:04:33,480 Speaker 1: how much you repay, like I said before, is dependent 88 00:04:33,520 --> 00:04:36,200 Speaker 1: on how much you are earning. So, just to give 89 00:04:36,240 --> 00:04:39,800 Speaker 1: you an example, someone earning fifty five thousand dollars is 90 00:04:39,880 --> 00:04:43,279 Speaker 1: only paying back one percent of their income, whereas someone 91 00:04:43,320 --> 00:04:46,280 Speaker 1: earning you know, let's say one hundred and fifty thousand dollars, 92 00:04:46,640 --> 00:04:51,760 Speaker 1: is paying nine percent of their income towards their compulsory repayments. Also, 93 00:04:52,240 --> 00:04:55,280 Speaker 1: just another thing to note is that it gets withheld 94 00:04:55,360 --> 00:04:58,480 Speaker 1: from your pay automatically by your employer. So that's something 95 00:04:58,480 --> 00:05:01,080 Speaker 1: that you'll see in your pay slip each month or 96 00:05:01,440 --> 00:05:04,600 Speaker 1: however often you get paid, and that is on behalf 97 00:05:04,680 --> 00:05:07,480 Speaker 1: of the ATO. But people with a help loan must 98 00:05:07,520 --> 00:05:09,480 Speaker 1: tell their employer so that they know. 99 00:05:09,600 --> 00:05:13,160 Speaker 2: To do this. Yes, so, as an employer myself, on 100 00:05:13,320 --> 00:05:16,560 Speaker 2: everyone's pay slips, you can see that loan as a 101 00:05:16,560 --> 00:05:17,960 Speaker 2: line item there, I guess. 102 00:05:18,400 --> 00:05:18,640 Speaker 1: Okay. 103 00:05:18,640 --> 00:05:21,560 Speaker 2: I want to turn now to a topic that is 104 00:05:21,560 --> 00:05:24,560 Speaker 2: in the news very often. So let's just picture this. 105 00:05:24,680 --> 00:05:27,560 Speaker 2: If you are taking out a normal loan, you usually 106 00:05:27,640 --> 00:05:30,440 Speaker 2: pay interest on top of paying back the actual amount 107 00:05:30,520 --> 00:05:33,640 Speaker 2: that you started with. But when it comes to student loans, 108 00:05:33,760 --> 00:05:37,640 Speaker 2: there is no interest. Instead, there's something called indexation. And 109 00:05:38,160 --> 00:05:40,440 Speaker 2: again it's something we've spoken a lot about. Can you 110 00:05:40,480 --> 00:05:43,159 Speaker 2: just walk us through what actually is indexation? 111 00:05:43,720 --> 00:05:46,520 Speaker 1: Yeah, and this is where the recent change that we're 112 00:05:46,560 --> 00:05:49,600 Speaker 1: talking about today comes in. But first I'll explain what 113 00:05:49,640 --> 00:05:53,440 Speaker 1: indexation is. So it's the way that an individual student 114 00:05:53,520 --> 00:05:57,720 Speaker 1: loan debt is adjusted every year to reflect the changes 115 00:05:57,760 --> 00:05:59,839 Speaker 1: in the cost of living. So, as we know, the 116 00:06:00,080 --> 00:06:04,200 Speaker 1: value of money changes over time, and the indexation is 117 00:06:04,279 --> 00:06:07,320 Speaker 1: designed to reflect that change in the value of money. 118 00:06:07,920 --> 00:06:10,719 Speaker 1: Now to explain how indexation works, I'm going to explain 119 00:06:10,800 --> 00:06:13,799 Speaker 1: how it worked previously, and then I'm going to explain 120 00:06:13,960 --> 00:06:17,039 Speaker 1: how it works now since that change has come into effect. 121 00:06:17,560 --> 00:06:21,479 Speaker 1: So previously, the indexation rate was only based on the 122 00:06:21,520 --> 00:06:25,960 Speaker 1: consumer price index, which we know better as inflation, and 123 00:06:26,000 --> 00:06:28,760 Speaker 1: that's a term that we have heard a lot about 124 00:06:28,920 --> 00:06:32,839 Speaker 1: in recent years, obviously in the rising cost of living, 125 00:06:33,240 --> 00:06:35,520 Speaker 1: and just for simplicity, we're going to call it inflation 126 00:06:35,760 --> 00:06:38,400 Speaker 1: for the podcast. So Zara, you might remember that around 127 00:06:38,440 --> 00:06:43,240 Speaker 1: two twenty train three that financial year, inflation was particularly 128 00:06:43,560 --> 00:06:47,360 Speaker 1: high and that resulted in the indexation rate applied to 129 00:06:47,480 --> 00:06:49,159 Speaker 1: help debts also being. 130 00:06:49,040 --> 00:06:51,960 Speaker 2: High because they were tied at that point exactly. 131 00:06:52,320 --> 00:06:55,040 Speaker 1: So in twenty twenty three, the student loan indexation rate 132 00:06:55,200 --> 00:06:57,920 Speaker 1: was seven point one percent, that is a lot. That 133 00:06:58,120 --> 00:07:01,440 Speaker 1: was the highest indexation rate applied to student loans in 134 00:07:01,520 --> 00:07:04,880 Speaker 1: more than thirty years, and in twenty twenty four, it 135 00:07:05,040 --> 00:07:08,280 Speaker 1: was also high at four point seven percent. Now, as 136 00:07:08,320 --> 00:07:11,160 Speaker 1: you might remember, many weren't happy with that. The Daily 137 00:07:11,160 --> 00:07:12,160 Speaker 1: OOS audience had. 138 00:07:12,000 --> 00:07:16,280 Speaker 2: A lot to say common section, yeah, very loud, veryvoc and. 139 00:07:16,560 --> 00:07:19,520 Speaker 1: So long story shot, the government decided to change what 140 00:07:19,720 --> 00:07:21,640 Speaker 1: the indexation rate is based on. 141 00:07:22,000 --> 00:07:24,520 Speaker 2: Okay, So you're saying, previously it was tied to indexation. 142 00:07:25,280 --> 00:07:29,200 Speaker 2: But when inflation rose and that number became extremely high, 143 00:07:29,240 --> 00:07:31,960 Speaker 2: so we were talking about seven point one percent, there 144 00:07:32,080 --> 00:07:34,840 Speaker 2: was this push to change that rate and what it 145 00:07:34,960 --> 00:07:37,840 Speaker 2: was Pegg two, What has that change been? 146 00:07:38,440 --> 00:07:41,840 Speaker 1: Okay? So they decided that the indexation could be based 147 00:07:41,880 --> 00:07:45,600 Speaker 1: on another measure, that one being the wage price index, 148 00:07:45,800 --> 00:07:49,640 Speaker 1: which measures how much the average income changes over time. 149 00:07:49,960 --> 00:07:52,000 Speaker 1: So you might remember that the conversation at the time 150 00:07:52,160 --> 00:07:54,920 Speaker 1: was that inflation was rising at a rate that was 151 00:07:55,080 --> 00:07:58,840 Speaker 1: much higher than what the average wages was and so 152 00:07:59,360 --> 00:08:02,520 Speaker 1: they took that feedback on board, I guess, and changed 153 00:08:02,560 --> 00:08:05,400 Speaker 1: it so that the rate of indexation could now be 154 00:08:05,520 --> 00:08:08,440 Speaker 1: based on what is lower of either the rate of 155 00:08:08,520 --> 00:08:12,000 Speaker 1: inflation or the rate of wage growth, and that will 156 00:08:12,080 --> 00:08:15,040 Speaker 1: mean that your student loan is never growing faster than 157 00:08:15,120 --> 00:08:16,280 Speaker 1: the average wage. 158 00:08:16,760 --> 00:08:20,440 Speaker 2: Okay. So previously the rate of indexation was based on 159 00:08:20,800 --> 00:08:25,360 Speaker 2: CPI on inflation. This change means that it will either 160 00:08:25,440 --> 00:08:29,080 Speaker 2: be the rate of inflation or the rate of wage growth, 161 00:08:29,240 --> 00:08:33,040 Speaker 2: whichever is lower exactly, Okay, And so when does this 162 00:08:33,240 --> 00:08:34,320 Speaker 2: change come into effect. 163 00:08:34,679 --> 00:08:38,800 Speaker 1: Well, they've actually backdated it, so it applies retrospectively from 164 00:08:38,960 --> 00:08:41,240 Speaker 1: during twenty twenty three. So remember I said that in 165 00:08:41,280 --> 00:08:44,280 Speaker 1: twenty twenty three the rate of indexation was at its 166 00:08:44,360 --> 00:08:46,600 Speaker 1: highest level in more than thirty years, and seven point 167 00:08:46,679 --> 00:08:50,800 Speaker 1: one percent that will retrospectively be changed to the rate 168 00:08:50,920 --> 00:08:53,560 Speaker 1: of wage growth at the time, which at that time 169 00:08:53,960 --> 00:08:57,160 Speaker 1: was lower than the rate of inflation at three point two. 170 00:08:57,040 --> 00:08:58,640 Speaker 2: Percent, considerably lower. 171 00:08:58,800 --> 00:09:01,800 Speaker 1: Yes, yeah, And the indexation rate for twenty twenty four 172 00:09:01,960 --> 00:09:05,120 Speaker 1: will also be reduced from four point seven percent to 173 00:09:05,280 --> 00:09:07,200 Speaker 1: four percent for the exact same reason. 174 00:09:07,760 --> 00:09:10,720 Speaker 2: And for anyone who's listening to this and thinking about 175 00:09:10,840 --> 00:09:13,640 Speaker 2: their debt, how do they find out how much relief 176 00:09:13,760 --> 00:09:15,199 Speaker 2: this change might have brought them. 177 00:09:15,520 --> 00:09:18,000 Speaker 1: So, if you had a help debt that was indexed 178 00:09:18,200 --> 00:09:20,319 Speaker 1: on the first of June train twenty three or the 179 00:09:20,400 --> 00:09:24,040 Speaker 1: first of June twenty twenty four, you've likely already received 180 00:09:24,200 --> 00:09:27,600 Speaker 1: an indexation credit on your student loan debt and it's 181 00:09:27,679 --> 00:09:29,959 Speaker 1: automatically applied, so you don't need to do anything to 182 00:09:30,040 --> 00:09:33,280 Speaker 1: apply for this relief, and if you're wanting to check 183 00:09:33,320 --> 00:09:35,959 Speaker 1: your loan, you can do that through your ATO online 184 00:09:36,000 --> 00:09:37,600 Speaker 1: account using my gov. 185 00:09:38,360 --> 00:09:41,559 Speaker 2: I just want to finish on talking about the timing 186 00:09:41,720 --> 00:09:44,599 Speaker 2: of indexation. I think you have tried to explain this 187 00:09:44,720 --> 00:09:47,760 Speaker 2: to me on about ten separate occasions. Going to admit, 188 00:09:48,000 --> 00:09:50,760 Speaker 2: it's still really confusing for me. So a lot of 189 00:09:50,800 --> 00:09:52,800 Speaker 2: people I think are in my camp and are time 190 00:09:52,840 --> 00:09:56,400 Speaker 2: of bit confused. Talk me through the timing of indexation. 191 00:09:56,840 --> 00:09:58,839 Speaker 1: This is confusing, but try to stay with me and 192 00:09:58,880 --> 00:10:00,600 Speaker 1: you can tell me at the end to But all 193 00:10:00,679 --> 00:10:03,520 Speaker 1: right if it makes sense. So, like like I said, 194 00:10:03,600 --> 00:10:05,719 Speaker 1: if you have a help debt and you're earning over 195 00:10:05,800 --> 00:10:08,800 Speaker 1: that minimum threshold that we discussed before, then you will 196 00:10:08,880 --> 00:10:14,080 Speaker 1: usually have repayments being automatically withheld each pay cycle. However, 197 00:10:14,840 --> 00:10:18,600 Speaker 1: the money being withheld from your pay each cycle doesn't 198 00:10:18,920 --> 00:10:22,520 Speaker 1: pay off your loan straight away, so it's not immediately 199 00:10:22,760 --> 00:10:27,560 Speaker 1: being deducted from your loan. It's basically put aside until 200 00:10:28,200 --> 00:10:31,199 Speaker 1: after the end of the financial year, so it's not 201 00:10:31,400 --> 00:10:34,400 Speaker 1: taken off the total loan amount until you have completed 202 00:10:34,600 --> 00:10:38,880 Speaker 1: your tax return for that financial year when your total 203 00:10:39,080 --> 00:10:42,959 Speaker 1: repayment income for the year is known, so then your 204 00:10:43,080 --> 00:10:47,360 Speaker 1: compulsory repayment can be calculated because, like we said, they 205 00:10:47,440 --> 00:10:50,240 Speaker 1: don't know how much of your HEX debt you need 206 00:10:50,320 --> 00:10:53,679 Speaker 1: to repay until they know what your total income for 207 00:10:53,880 --> 00:10:57,360 Speaker 1: that year is, and so that means that your repayments 208 00:10:57,400 --> 00:11:02,120 Speaker 1: aren't deducted from your loan until after the indexation is applyed. 209 00:11:02,200 --> 00:11:03,800 Speaker 2: Okay, I think I understand. 210 00:11:04,640 --> 00:11:06,480 Speaker 1: I look forward to in a month's time you telling 211 00:11:06,480 --> 00:11:07,680 Speaker 1: me exactly. 212 00:11:07,400 --> 00:11:09,880 Speaker 2: The same question. Well, Billy, thank you for joining me 213 00:11:10,120 --> 00:11:13,120 Speaker 2: on this lovely Sunday morning to talk through help and 214 00:11:13,400 --> 00:11:16,800 Speaker 2: HEX and everything else we need to know. Very helpful 215 00:11:16,920 --> 00:11:20,600 Speaker 2: for all of those unique students listening to properly understand 216 00:11:21,040 --> 00:11:22,920 Speaker 2: how this works, how the system works, and what this 217 00:11:23,080 --> 00:11:25,920 Speaker 2: change might mean for them. We'll be back again tomorrow 218 00:11:25,960 --> 00:11:29,000 Speaker 2: morning with a deep dive, but until then, have a 219 00:11:29,080 --> 00:11:29,959 Speaker 2: wonderful weekend. 220 00:11:33,360 --> 00:11:37,240 Speaker 1: This podcast was produced with financial support from the Australian Government. 221 00:11:38,360 --> 00:11:40,640 Speaker 1: My name is Lily Maddon and I'm a proud Arunda 222 00:11:40,880 --> 00:11:44,960 Speaker 1: Bune Lung Chalcotin woman from Gadigl Country. The Daily oz 223 00:11:45,120 --> 00:11:47,839 Speaker 1: acknowledges that this podcast is recorded on the lands of 224 00:11:47,880 --> 00:11:51,160 Speaker 1: the Gadighl people and pays respect to all Aboriginal and 225 00:11:51,240 --> 00:11:54,240 Speaker 1: Torres Straight Island and nations. We pay our respects to 226 00:11:54,320 --> 00:11:57,200 Speaker 1: the first peoples of these countries, both past and present.