Thinking of paying off your HECS debt before indexation? The ATO says you better do it tomorrow

The looming financial new year heralds an unwelcome extra cost for thousands of people who currently have HECS-HELP debts.

This is because every unpaid debt is going to automatically increase when it’s indexed on June 1.

In previous years, the HECS indexation rate was relatively modest.

But thanks to soaring inflation, this year’s indexation rate is set to hit more than 3 million Australians hard.

Here’s what you need to know.

What is indexation?

Indexation means that the price of something is changed in correspondence with an external factor.

In this case, the price of something is your student debt and the external factor is the Consumer Price Index (CPI).

Each year your student loans increase based off the CPI percentage which is a set of…