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The student debt of more than three million Australians is expected to be reduced in the federal budget as part of measures to ease cost-of-living pressures.
Education Minister Jason Clare said the decision would wipe out about $3 billion in higher education loans after loans rose 7.1 percent last year as a result of rising inflation.
The government said a person with an average HELP debt of $26,500 would see about $1,200 wiped off their outstanding loans pending the legislation.
“In other words, so that indexation doesn’t rise faster than the average wage,” Clare said.
The relief will be retroactive to all HELP, VET Student Loan, Australian Apprenticeship Support Loan and other Student Support Loan accounts that existed on 1 June last year.
“This will wipe out what happened last year and ensure it never happens again,” Clare said.
Skills and Training Minister 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 ensure that help is provided on a fairer basis,” O’Connor said in a statement .
The government said that based on the WPI, the indexation rate would be 3.2 percent.
The significant increase in indexation last year has many people with student loans worried as Australians face rising living costs and barriers to the housing market.
The Albanese government is under increasing pressure from the Greens and the crossbench to act on the issue.
A petition launched by Independent MP Dr Monique Ryan to make it easier to pay off HECS debts has gathered 288,000 signatures.
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