PoliticalClaims.au

While the claim that the Coalition "started charging interest on HECS" is false, there is a kernel of truth: the Abbott Government did PROPOSE such a change in its controversial 2014-15 Budget. **What actually happened:** - The 2014-15 Budget announced plans to apply real interest rates (based on the 10-year government bond rate, up to 6%) to HELP debts [4][5] - Economist Bruce Chapman, who designed the original HECS system in 1989, strongly opposed the change, warning it would hit poorer students hardest as they take longer to repay [4][5] - Following this criticism and Senate opposition, the Government abandoned the real interest component by August 2014 [3] - The real interest proposal NEVER became law - HECS-HELP continues to use CPI indexation only (as of 2025) [2] **Policy rationale:** The Coalition argued that HELP loans were subsidized because CPI indexation didn't cover the government's cost of borrowing, and that real interest would make the system more sustainable [4]. **Criticisms:** Critics noted that real interest would mean lower-income graduates (who take longer to repay) would pay significantly more than higher-income graduates, undermining the progressive nature of the income-contingent loan system [4][5]. **Key context:** This is NOT unique to Coalition-Labor dynamics.