A few months ago I argued that flat graduate incomes and an initial threshold that was indexed to average weekly earnings was going to mean fewer graduates making a repayment. The 2012-13 taxation statistics that came out today shows that this is already a problem. The total number of people who made a HELP repayment that year dropped by over 2,000 compared to 2011-12, while the total number of debtors increased by more than 142,000.

The surge in enrolments since 2009 means that it is inevitable that a lower percentage of debtors will make a repayment, since it takes time for people to finish their courses and enter the workforce. But this is only the second time since HECS/HELP started in 1989 that the absolute number of people making a repayment went down, other than due to a deliberate policy shift (increasing the threshold for 2004-05). Total repayments did go up by $24 million, or about 1.6%.

The falling number of debtors making a repayment highlights again the need for a lower threshold and measures to reduce the manipulation of HELP repayment income.