Labor Government Unveils 20% Reduction In Student Loans, Erasing Nearly AU$16 Billion In Debt

The Labor government has announced plans to reduce student loans by 20%, effectively eliminating nearly AU$16 billion ($10 billion) in debt, Australian Prime Minister Anthony Albanese announced on Sunday.

The government's action is part of the initiatives that builds on the budget, which aims to tackle the rising cost of living in Australia by offering debt relief for students, lowering the cost of medicines, and enhancing support for a rent assistance program, Reuters reported.

"This will help everyone with a student debt right now, whilst we work hard to deliver a better deal for every student in the years ahead," Albanese stated as he announced the slash to student loans for tertiary education.

As the new changes take effect on June 1, 2025, an average graduate with a loan of AU$27,600 will have AU$5,520 removed from their debt.

Additionally, the government announced plans to raise the Higher Education Contribution Scheme threshold, allowing graduates to start repaying their debt only after they earn over AU$67,000, up from the current threshold of AU$54,000. The repayments will increase gradually as individuals' salaries rise, Sky News reported.

The Labor also promised to enact laws to guarantee 100,000 free spots each year at the country's Technical and Further Education (TAFE) institutes, if they were reelected in the next general election in 2025.

Education Minister Jason Clare stated that the changes will benefit three million Australians who currently hold student debt from university or TAFE qualifications.

"If we are re-elected, this will be the first piece of legislation that we introduce to the Parliament after the election," Education Minister Jason Clare told Sky News Australia's Sunday Agenda. "And it'll make a massive difference for a lot of young Australians right across the country, not just young Australians, though – everybody that has a student debt cut by 20%."