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More than three million Australians are expected to have their student debt cut in the federal budget as a part of measures to ease cost of living pressures.
Education minister Jason Clare said the decision would wipe about $3 billion in higher education loans, after loans increased by 7.1 per cent last year as a result of surging inflation.
The government said a person with an average HELP debt of $26,500 would see about $1200 wiped from their outstanding loans pending the passage of legislation.
Clare said the Australian Universities Accord had recommended the government cap the HELP indexation rate for student debt to be the lower of either the Consumer Price Index (CPI) or the Wage Price Index (WPI) with effect from June 1, 2023.
“In other words, so indexation doesn’t go up faster than the average wage,” Clare said.
The relief will be backdated to all HELP, VET student loan, Australian Apprenticeship Support Loan and other student support loan accounts that existed on June 1 last year.
“This will wipe out what happened last year and make sure it never happens again,” Clare said.
Minister for Skills and Training Brendan O’Connor said the move would reduce and remove financial barriers to education and training.
“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,” O’Connor said in a statement.
The government said based on WPI the indexation rate would have been 3.2 per cent.
The significant indexation rise last year caused concern for many people with student loans, as Australians face increasing living costs and barriers to the housing market.
The Albanese government has been under increasing pressure from the Greens and the crossbench to act on the issue.
A petition started by independent MP Dr Monique Ryan to make HECS debts easier to pay off gained 288,000 signatures.
