2 days ago
Labor urged to rethink 20 per cent student debt cut as leading research body calls for flat $5500 relief
A flat $5500 reduction of HELP debt would deliver better uniform relief for Australians with student debt, with analysis of Labor's signature policy finding that the cost-of-living relief would currently largely help high-income earners.
The research, released by not-for-profit research body e61 Institute on Thursday found the policy as is, doesn't meaningfully speed up debt repayment, and unfairly benefits students who graduated in 2024.
Instead of a 20 per cent cut to balances, e61 said the relief would be better targeted if Australia's with student debt were given a flat $5500 cut.
The figure also represents the average amount set to be wiped across all HELP accounts.
e61 said that a $5500 reduction would help 35 per cent of account holders make their final repayment in an earlier year, or 15 per cent more debt holders than a 20 per cent discount.
e61 Research Economist Matthew Maltman said the benefits of a straight cut was important factor due to the policy's $16bn price tag, which equals the annual cost of Jobseeker.
'Most HELP debt is held by university graduates, who have much higher lifetime incomes than the average taxpayer. And even if you look within graduates, those with more costly degrees tend to go on to earn higher incomes in the future,' he said.
'You could make the argument that we need to provide debt relief to humanities students in a
targeted way because of Job Ready Graduates.
'But the current policy isn't at all targeted and that means it's going to give a very large amount of debt relief to future lawyers, dentists and doctors who are going to go on to enjoy very high lifetime incomes.'
University students who finished their degrees in 2024 will also receive twice as much relief as people who left in 2020, and two and a half times more than students who are currently in their first year of a three year degree.
e61 Senior Research Economist Jack Buckley said this would create a debt relief lottery.
'If you cut 20 per cent of each individual's balance, it means two very similar people will receive very different amounts of debt relief simply because one finished their degree in 2024 and the other finished a few years earlier or later,' said Mr Buckley.
Anthony Albanese has repeatedly said the 20 per cent cut to HELP debts will be the first piece of legislation passed when parliament returns on July 22, with the changes backdated to account balances as of June 1.
Labor is also set to increase the debt repayment threshold from $56,156 to $67,000, repayments of payment will also be lowered.
