In a significant move for higher education, the Australian government is poised to deliver substantial student debt relief to millions. Education Minister Jason Clare has confirmed that legislation being introduced this week will cut student debt by 20% for three million Australians.
Substantial Financial Relief for Graduates
The sweeping reforms represent one of the largest student debt relief programmes in Australian history. The average Australian with a HECS/HELP debt will see approximately $5,500 wiped from their student loans under the proposed changes. For those earning an average income of $70,000, the measures will reduce their minimum repayment requirements by about $1,300 annually.
Additionally, the minimum repayment threshold will increase significantly from $54,000 to $67,000. This adjustment is expected to save the typical debt holder around $680 per year while reducing financial pressure on lower income earners.
Implementation Timeline and Process
The legislation enters parliament on Tuesday, though passage may take several weeks as childcare reforms take priority in Labor's legislative agenda. Once approved, the Australian Tax Office will apply the 20% reduction retrospectively to all outstanding debt as it stood on 1 June 2025.
Debt holders won't need to take any action to receive the benefit. The indexation applied after this date will only affect the remaining loan balance after the reduction, ensuring maximum benefit for borrowers.
Mixed Response and Criticisms
While students have welcomed the debt relief, many argue it doesn't address fundamental issues within the higher education system. Ashlyn Horton, President of the National Union of Students, described the cuts as "long overdue" but insufficient to fix structural problems.
The Greens have highlighted that when accounting for indexation since the 2022 election, the actual reduction amounts to just 8% rather than the promised 20%. Analysis shows that a $30,000 debt from 2022 would have grown to $33,454 before the reduction, then drop to $26,763 after the cut, and rise again to $27,619 with 2025 indexation.
Despite criticisms, the legislation appears likely to pass with both the Coalition and Greens indicating they're unlikely to oppose the popular cost-of-living measure. Shadow Education Minister Jonathon Duniam acknowledged that Australians "voted for" this relief and the Coalition wouldn't stand in its way.
Future Education Reforms
Minister Clare has signalled that more comprehensive higher education reforms will follow in Labor's second term. The government plans to establish a new Australian Tertiary Education Commission, implementing a key recommendation from the Universities Accord report.
This independent body will tackle degree pricing reforms and introduce needs-based funding similar to primary and secondary education systems. However, no timeframe has been set for addressing the controversial Job-Ready Graduates package that dramatically increased arts degree costs to $50,000.
