For students studying in Australia, the cost of education is set to go up. From June 1, 2023, the indexation on student loans will increase to 7.1% from its current 3.9% level. The impact of this increase will be largely on students with HELP loans – Higher Education Loan Programme.
HELP loans for students are among the least expensive debts in Australia because they have no interest. However, they are adjusted annually based on the cost of living index. If the cost of living index or inflation goes up, the outstanding student debt goes up. Indexation preserves the loan’s real value by adjusting it to reflect increases in the cost of living as determined by the consumer price index (CPI). The indexation figure is calculated each year following the announcement of the March CPI and is added to the student’s debt on 1 June each year.
Should Indian students who have taken education loans from Indian banks to study in Australia be concerned? “Indexation’s impact only applies to students who have opted for HECS-HELP. It’s a government program for students part of Commonwealth Supported Place, where the Australian government partially finances a student’s education. So, students taking loans from Indian banks don’t have to worry about clearing an increased amount of debt due to indexation,” says Amit Singh, Founder of UniCreds, an extended arm of UniScholars.
A rise in the inflation index means the cost of living has gone up. To meet the same expenses, one will have to cough up a higher amount of dollars. Indian students should take inflation into consideration while planning to move to any country. In the case of Australia the inflation graph has come down to 7% in 2022 from its earlier position of 7.8% which makes it a more preferable option for students,” Singh adds.
A new education agreement between India and Australia has been put in place in March 2023. The agreement, called the Mechanism for the Mutual Recognition of Qualifications, is India’s most comprehensive education agreement of its kind with another country. The Mechanism means that Indian students obtaining a degree from an Australian university will have that degree recognized in India for the purposes of continuing higher education.
“The nation has established itself as one of the most sought-after locations for higher education, thanks to the global recognition of universities and recent changes brought about by Australian immigration to find employment while studying. This means that the nation will continue to be a top choice for Indian students who want to pursue advanced degrees abroad,” says Singh.