Labor to wipe 20 per cent of student debts from June 1

Anthony Albanese says his first piece of legislation in the new parliament will wipe 20 per cent from outstanding student loans on June 1.

From June 1 this year, 3 million Australians will have their student debts cut by 20 per cent, in an election promise that has paid off for the Labor Party. Picture: iStock

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University students and voters with degrees delivered Labor at least three extra seats in the weekend election, in a win for Anthony Albanese’s promise to wipe $16bn in student debts.

In 20 electorates with the most voters with HECS/HELP student debts, Labor retained 14 and seized three extra seats.

With counting still under way, the ALP is on track to win back the seat of Melbourne from Greens leader Adam Bandt, and is in a tug of war to take the blue-ribbon seat of Menzies from the Liberal Party.

The re-elected Albanese government’s first piece of legislation when federal parliament resumes will be to introduce a bill wiping $16bn in student debt for three million Australians.

Education Minister Jason Clare said the 20 per cent cut to student debts would be a ‘game-changer for more than three million Australians’. Picture: Jason Edwards / NewsWire

On June 1, the government will cut 20 per cent from outstanding balances on taxpayer-funded loans for university study – known as Higher Education Contribution Scheme or Higher Education Loans Program – as well as VET Student Loans and Australian Apprenticeship Support Loans.

For a graduate with an average HELP debt of $27,600, the government will wipe $5520 from the amount they have to pay back.

Repayment thresholds will be increased on July 1, so that graduates won’t have to start repaying their loans through the taxation system until they earn $67,000 a year. The existing threshold of $54,435 is barely above the minimum wage.

The debt forgiveness will apply to anyone with a student loan – including current students as well as older graduates.

The election promise has successfully sandbagged dozens of Labor seats, with a Parliamentary Library analysis of Australian Taxation Office data revealing that Labor now holds 17 of the 20 seats with the most university students or graduates.

Greens leader Mr Bandt’s seat of Melbourne – which he could lose to Labor’s Sarah Witty – has the most university-educated voters, with 35,307 of them set to have one-fifth of their debts wiped.

Two other Greens seats, Brisbane and Griffith, were wrested back by the Labor Party.

The Greens’ campaign for free university education did not seem enough to woo support from voters who felt Labor’s practical plan would put money in their pockets.

The Coalition opposed cutting HECS debts as “profoundly unfair’’ because other taxpayers would have to cover the cost.

The Coalition also opposed two other Labor policies popular with younger voters – fee-free TAFE and $315-a-week “prac payments’’ to trainee teachers and nurses while they undertake mandatory paid-work experience during their university degrees.

Federal Education Minister Jason Clare said the 20 per cent cut to student debts would be a “game-changer for more than three million Australians’’.

“The Liberals called these changes ‘terrible’ but the Australian people disagree,’’ he said.

“The Australian people voted for this, and Labor will deliver it.

“This will be the first piece of legislation we will introduce in the next parliament.’’

Other seats with the highest number of university-educated voters include Anthony Albanese’s inner-Sydney seat of Grayndler, where 28,009 voters will benefit, and Mr Clare’s western Sydney seat of Blaxland, with 25,901 voters.