student loan

The Federal government has announced to cut $3 billion in student debt through changes in the HECS and HELP programs, a move that will ease pressure on workers and students across the country.

The proposed move will cap the indexation rate for student loans and reduce it from a record 7.1 per cent to 3.2 per cent, and cut $1,200 from an average debt of $26,500.

In Australia, nearly 3 million have student loans, at an average debt of $26,500. This proposed measure will ease about $1,200 from their HECS and HELP debt this year, The Guardian reported.

Minister for Education 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. "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," Clare stated.

He added that HECS/HELP relief measures would be the first of a series of reforms to be implemented as recommended in the Australian Universities Accord.

Earlier, this year, Australian Universities Accord, a review of higher education, had recommended changing the way the Higher Education Contribution Scheme (HECS) and Higher Education Loan Program (HELP), the most common options of securing students loans, were indexed.

The report had warned how the rising student debt levels, which had reached $74 billion, were keeping people away from universities. To HECS "simpler and fairer," the review report 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, ABC News reported.

Accordingly, the government has announced plans to backdate this debt relief to all HELP, VET Student Loan, Australian Apprenticeship Support Loan and other student loans that existed on 1 June last year.

The proposed debt measure will also help apprentices who owe money through the VET Student Loan program or Australian Apprenticeship Support Loan.

"This continues our work to ease cost-of-living pressures for more apprentices, trainees and students, and reduce and remove financial barriers to education and training," Skills and Training Minister Brendan O'Connor said. "By backdating this reform to last year, we're making sure that apprentices, trainees and students affected by last year's jump in indexation get this important cost-of-living relief."

The Universities Accord report has also recommended measures including a stipend for unpaid mandatory placements, scrapping the former federal government's failed Job Ready Graduates Scheme and reducing student contribution amounts for low-income earners.