Government to cutstudent debt by $3 billion

THE Albanese government has announced a significant reduction in student debt, affecting more than three million Australians, ahead of its third federal budget to be handed down on Tuesday, May 14.

Minister for education Jason Clare said the government’s initiative would erase about $3 billion in student debts, providing substantial relief for students and workers nationwide.

“The Universities Accord recommended indexing HELP loans to whatever is lower out of CPI and WPI.

“We are doing this, and going further. We will backdate this reform to last year. This will wipe out what happened last year and make sure it never happens again.”

The 2024 Australian Universities Accord report contains 47 recommendations for government consideration with the aim to create a long-term reform plan for the higher education sector.

In conjunction with the Australian Universities Accord, the government will adjust the HELP indexation rate to the lower of either the Consumer Price Index (CPI) or the Wage Price Index (WPI).

The relief will be retroactively applied to all relevant student loan accounts as of June 1 of the previous year.

This change comes in response to last year’s CPI indexation rate spike of 7.1 per cent, which significantly increased the burden of student debts.

The new indexation rate based on WPI would be 3.2 per cent.

Minister for skills and training Brendan O’Connor emphasised the broader impact of this decision on vocational training and apprenticeships.

“VET Student Loans and Apprenticeship Support Loans support many Australians to get the skills they need for secure and rewarding careers, and these changes make sure that help is provided on a fairer basis,” Mr O’Connor said.

“By backdating this reform to last year, we’re making sure that those with student loans affected by last year’s jump in indexation get this important cost-of-living relief.”

Local law graduate Amy Lee welcomed the changes but noted that more could be done.

“This generation faces unprecedented costs for housing and education. It’s crucial that future policies continue to address these challenges,” she said.

Australians with outstanding HELP debts are expected to see significant reductions, with an average debt holder owing $26,500 likely to benefit from about $1,200 being wiped from their loan this year.

The government has also announced plans to introduce new support measures for students undertaking mandatory workplace placements.

The Commonwealth Prac Payment will assist students studying fields like teaching, nursing, midwifery, and social work, providing $319.50 per week during their placement periods.

Mr Clare said the new measures would help address skills shortages in critical areas and support the government’s gender equality strategy.

“Placement poverty is a real thing. This is practical support for practical training.”