Millions of Australian graduates will see their student debts hiked at the highest rate of indexation in decades.
Indexation applies to debts from June 1, designed to increase the amount owed on a degree in line with the interest rate at the time.
WATCH THE VIDEO ABOVE: Student loans set to spike.
Looking for a new job or job candidate? Post jobs and search for local talent on 7NEWS Jobs >>
This year, the indexation rate is 7.1 per cent.
That means, for someone with the average loan of $24,770, their debt will increase by more than $1750.
Advocates had called for a pause to student debt indexation, to no avail.
Students, meanwhile, say the hike will add to their cost of living struggles.
Overall, the total value of Australian HECS loans is set to increase by $4.5 billion due to indexation.
Lily Anne Chapman, 22, is working hard to get her environmental science degree from UNSW, and is almost at the finish line with her graduation set for August 2023.
But, the Broken Hill-born student says she will be hit with an extra $1540 charge next month, adding a fresh blow to a string of cost-of-living pressures for young Australians like her.
“When it comes to the cost of living, everything is going up for us,” she told 7NEWS.com.au.
“You know rent is going up, and we’re already scared of having to pay it (HECS) back let alone having to repay it as it’s going up again.”
Chapman says she is worried a large chunk of her income from a graduate role will be taken, leaving her with little room to save.
“I’m in the process of applying for graduate roles, and something that I have to think about is what my minimum salary can be,” she said.
“And unfortunately in a competitive job market I have to deny jobs that will not pay enough because a good chunk of my income will be indexed and paid back.
“So it’s impacting my ability to search for jobs and further my career, but it also impacts my ability to live in the city where all the jobs are when rent is going up.”
Chapman added, at this stage, it was “impossible” for her to plan to buy a house when she could barely save.
“So I have to think about how I’m going to balance paying back my increased debt and increased rent, which makes it borderline impossible to save for a house after everything,” she said.
Chapman says students who come from remote towns are at an ever greater disadvantage and will most certainly feel the pinch of the HECS debt increases.
“I already had a big fear of having to pay back that HECS debt but when you pair that with the cost of relocating it becomes quite expensive and quite scary,” she said.
“So, young adults are having to pay for all this and many haven’t had the opportunity to save and not everyone’s parents may be in the position to help.”
Champan added without the support of the Country Education Foundation, which helps rural students pay for costs directly related to study such as textbooks, accommodation and travel, completing her studies would have been “virtually impossible”.
Meanwhile, the National Union of Students (NUS) estimates the total value of HECS loans will increase by $4.5 billion on June 1.
NUS said “rapidly increasing student loans will keep graduates in debt for longer”.
“High levels of student debt will also force many potential students to re-think higher education altogether, widening inequity and increasing under representation in the higher education sector,” it said.
“Indexation at an estimated 7 per cent means individual HECS debts will increase even if a student or graduate doesn’t earn enough to pay it down.”
If you’d like to view this content, please adjust your .
To find out more about how we use cookies, please see our Cookie Guide.