Millions to win from huge change to this debt

Perth Now

6 days ago

The Albanese government has chosen their first winners in the new parliament, as it promises to shave 20 per cent off all student debt in its first sitting week.
Labor is set to introduce legislation as parliament returns this week that will wipe $16bn in student debt for approximately three million Australians.
It will target loans including HELP debt, VET loans and apprenticeship loans. The government said the average debt-holder will have a $5520 reduction. NewsWire / Jeremy Piper Credit: News Corp Australia
According to calculations from the government someone with the average HELP debt of $27,600 will have $5520 wiped from their outstanding loans.
People at the upper end of debt, exceeding $60,000, could see a reduction of more than $12,000.
The legislation, if it passes, will also raised the minimum repayment threshold from $54,000 to $67,000, meaning low-income earners will not have to start paying back their debt.
Following the passage debt-holders will not have to do anything to get the reduction, it will be applied by the Australian Taxation Office automatically.
Education Minister Jason Clare said the change would 'take a lot of weight off the shoulders' for recent graduates
'You don't start paying off your university degree until your degree starts to pay off for you,' he said. Education Minister Jason Clare said the reform will 'take a lot of weight off' young people. Canberra. NewsWire / Martin Ollman Credit: News Corp Australia
The reform was first promised in November 2024, well before the election, after the government changed the way student loans were indexed.
At the time this brought down student debts by about $3bn.
Prime Minister Anthony Albanese announced the 20 per cent reduction following the indexation reform as a pitch for his government to make the education system 'fairer and affordable for every Australian'.
'No matter where you live or how much your parents earn, my Government will work to ensure the doors of opportunity are open for you,' Mr Albanese said in November.
Now, with the new Parliament beginning on Tuesday, the government is promising the 20 per cent cut will be the first thing it does.
'We promised cutting student debt would be the first thing we did back in Parliament,' Mr Albanese said.
'And this week we're introducing the legislation to make it happen.
'Because getting an education shouldn't mean a lifetime of debt.' Prime Minister Anthony Albanese said the reduction would be the first thing his new government does. NewsWire / Martin Ollman Credit: News Corp Australia
The legislation will be introduced on Tuesday, but the government will need the support of either the Greens of the Coalition to get the it through the Senate.
This means it will likely be a few weeks before it actually comes into effect.
Both the Greens and the Coalition have indicated they are unlikely to block the bill, but both have voiced concerns.
Liberal education spokesman Jonno Duniam told the ABC's Insiders program on Sunday that Australians 'spoke pretty clearly at the last election' about this key Labor policy.
'We're not really in business of standing in the way of cost-of-living relief,' Senator Duniam said.
'We'll go through our process but I expect this will pass the parliament.' Senator Jonno Duniam indicated the Coalition would likely help pass the bill. NewsWire / Martin Ollman Credit: News Corp Australia
For their part, the Greens requested the Parliamentary Library analyse how much the debt reforms will reduce balances since 2022.
It found that a student who had a $30,000 debt in 2022 would have a $27,619 debt after the 20 per cent cut, meaning it would only be a 7.9 per cent cut on that 2022 level.
This is because student debt increases each year relative to inflation.
The Greens position is that it wants all student debt to be wiped and free university and TAFE to be reintroduced.
Greens higher education spokeswoman Mehreen Faruqi said that 'one-off debt reduction won't fix the enormous burden' of university fees and outstanding student debt.
'Of course any student debt relief is better than none, but we are demanding all student debt be wiped and a return to free uni and TAFE, funded by taxing big corporations to pay their fair share,' she said. Greens higher education spokeswoman Mehreen Faruqi said the change will not fix 'the enormous burden' of student debt. NewsWire / Luis Enrique Ascui Credit: News Corp Australia
Student debt massively increased since the previous Coalition government introduced its 'Job-Ready Graduates' scheme in 2021 which increased the costs students have to pay for degrees that were purportedly less desirable.
This was designed to incentivise students to study degrees in fields such as science and engineering.
In practice there was only a marginal reduction in the number of students studying arts degrees, but the costs for those courses increased as much as 140 per cent – massively increasing the debt burden for some students.