HECS debts for former students to be cut by 20pc as Anthony Albanese announces relief for young professionals

Millions of dollars in student debts will be wiped for hundreds of thousands of graduates in a cost-of-living relief measure before the upcoming Federal election.

Anthony Albanese will announce on Sunday that the Government will slash 20 per cent off each student loan debt such as HECS-HELP, Vet Student and Australian Apprenticeship Support loans, as well as “other income-contingent students’ loans”.

It’s expected the measure, to come into force from June 1, will cut student loan debts by about $20 billion for about three million Australians.

Where higher education was once free, students now have to make financial contributions — most choosing to do that through a Higher Education Loan Program which is repaid through the tax system once they start working.

For years it has irked parents and students alike that when youngsters graduate from university, they leave with a huge HELP debt of tens of thousands of dollars — taking years to pay off and putting enormous pressures on finances during the early years of employment.

The debt is also causing problems for graduates and young professionals trying to get into the housing market.

National Australia Bank, in a submission to a parliamentary inquiry on home ownership, has suggested lenders be able to ignore HELP debt in mortgage applications, to allow for more people to be successful in getting a home given the debts are designed to be repaid.

Sunday’s announcement follows other changes announced this week which will see workers with student loans have their repayments cut by an average of $680 a year.

Under the new arrangements, the minimum repayment threshold will lift from $54,000 to $67,000 in July and be indexed to remain at 75 per cent of average graduate earnings.

“I will always fight for every young Australian to have access to a good education,” Mr Albanese said.

“My Government will make sure our education system is fairer and affordable for every Australian and we won’t delay unwinding the damage caused by the former Coalition government.

“We’re already fixing indexation and today, we are going further by taking 20 per cent off student debt — for everyone with a student debt.

“This will help everyone with student debt right now, whilst we work hard to deliver a better deal for every student in the years ahead.”

It’s estimated under these new changes, a university graduate with the average HELP debt of $27,600 will see about $5520 wiped from their outstanding loans next year.

The Government will legislate for this commitment next year.

“Our whole nation benefits when we make it easier for people to access education. This is about opening the doors of opportunity — and widening them,” Mr Albanese said.

“No matter where you live or how much your parents earn — we will work to ensure the doors of opportunity are open for you.”