The Australian federal government has unveiled new legislation aimed at reducing student debt, a key promise made by the Labor Party during the last election. This initiative proposes to diminish the overall value of student loans—including HECS debts—by 20 per cent, benefiting around three million Australians.
Prime Minister Anthony Albanese stated, “This is another way my government is continuing to deliver cost-of-living relief to Australians,” emphasising the urgency of tackling the burden of education-related debt. He reaffirmed the government’s commitment to making education accessible without imposing lifelong financial strains on graduates.
Recent polling indicates that more than half (51 per cent) of participants feel they will never fully repay their HECS debts without assistance, underscoring the significance of this move. Under the new legislation, an average borrower with a loan of approximately $27,600 could expect about $5,520 to be wiped from their debt.
The measure is projected to cost the government around $16 billion and will encompass not just HECS debts but also those connected to Vocational Education and Training (VET) Student Loans, Australian Apprenticeship Support Loans, and Student Startup Loans. The debt relief will be effective retroactively from June 1 this year.
The legislation comes in the wake of recent indexation increases; for instance, a 3.2 per cent indexation rate in 2025 added roughly $882 to a $27,600 loan. Importantly, beneficiaries will not need to take any action to realise this debt relief, as adjustments will reflect in their accounts following the legislation’s approval.
Education Minister Jason Clare remarked on the impact of this initiative, particularly for recent graduates: “Just out of uni, just getting started, this will take a weight off their back.” Additionally, the government has proposed to raise the income threshold for commencing HECS repayments from $56,156 to $67,000, potentially lowering repayments for individuals earning $70,000 by $1,300 annually.
“This is real help with the cost of living. It means more money in your pocket, not the government’s,” Clare added. This bill, among the first to be introduced in the new parliament, appears to have broad bipartisan support, with Coalition representatives indicating they do not intend to obstruct its progress, acknowledging the public’s demand for cost-of-living relief.
Shadow Education Minister Jonathon Duniam noted, “We’re not really in the business of standing in the way of cost-of-living relief… and it is one of those things that Australians wanted, they voted for.” The timeline for passing the legislation remains uncertain, as it may undergo weeks of debate in both the Senate and House of Representatives.
In summary, the government’s proposal reflects a significant financial shift aimed at alleviating the burden of student debt across Australia, ensuring that education can be pursued without the fear of long-term financial consequences. This legislation not only addresses immediate debt relief but also paves the way for broader discussions regarding educational financing and accessibility.
