Student debt to be slashed as part of Anthony Albanese’s pre-election cost of living blitz
The slashing of student debts will be unveiled at a Labor rally in Adelaide, in what will be the first of a series of speeches made by Anthony Albanese laying out his second term agenda.
A plan to overhaul student loans and cut up to $1300 from the debt load of young Australians will form the first part of Anthony Albanese’s pre-election cost of living blitz, as he bids to win over Generation Z voters and set out a new second-term agenda.
Amid concern among backbench Labor MPs that allegations the Prime Minister solicited flight upgrades from ex-Qantas boss Alan Joyce and his purchase of a $4.3m harbourside home was distracting from the government’s messaging, the Prime Minister will on Sunday unveil changes to the repayment of student debts on Higher Education Loan Program (HELP) accounts.
The announcement, which will be made at a rally in Adelaide alongside South Australian Labor Premier Peter Malinauskas, will be the first of a series of speeches made by Mr Albanese in which he will lay out Labor’s legislative proposals for a second parliamentary term.
Speaking ahead of the announcement, the Prime Minister sought to paint Labor as the “party of education” and promised to take a “positive and ambitious agenda” to the next federal poll, widely expected to be held in May.
“No matter where you live, no matter how much your parents earn – we will work to ensure the doors of opportunity are open for you,” he said. “We will make it easier for young Australians to save in the future, and we are going to make the system better and fairer as well.”
Under the changes, the minimum repayment threshold on HELP loans will be lifted from its current level of $54,435 to $67,000 in 2025-26, with the rate indexed annually to 75 per cent of graduate earnings. Previously, the thresholds were indexed to the consumer price index.
The government will also overhaul how repayments on student debts are calculated. It plans to implement a marginally based collection system, akin to the income tax system, by applying a repayment rate to each extra dollar earned above the new thresholds.
Previously, debtors paid a proportion of their total annual income, which left some HELP loan recipients worse off when their income increased.
The top repayment threshold will rise to $180,000, up from its current level of $159,664, after which point graduates will pay a flat repayment rate of 10 per cent.
Labor plans to legislate the reform in the new year, with the average HELP debtor to pay around $680 less in repayments each year, it claims.
The reform also delivers on the recommendations a sweeping review of Australia’s tertiary education sector released earlier this year, which suggested altering how repayments are calculated and when they are deducted.
Jim Chalmers has previously signalled a willingness to offer additional cost of living relief, but with underlying inflation remaining outside the Reserve Bank’s 2 to 3 per cent target band, and investors not expecting a quarter point rate cut until May, any pre-election cash splash risks stoking persistent price pressures.
Changes to loan repayments are therefore an attractive option for the Treasurer as they will have a negligible impact on inflation.
With the Greens threatening to peel voters from Labor’s left-flank, the government’s student debt relief proposal is likely to receive strong support from younger voters, the age cohort who have borne the greatest impact from the cost-of-living squeeze.
The government’s previously unveiled reform which altered the way HELP debts were indexed proved popular among graduates who, in many cases, experienced their liabilities grow at a much faster rate than they could repay them due to the recent bout of high inflation.
The tertiary education review also recommended changing the timing of indexation to deduct compulsory repayments first, and suggested a probe of bank lending practices to ensure HELP loans did not limit people’s borrowing capacity for home loans.
Universal childcare isn’t always the best deal for youngsters
If it turns out centre-based care is harmful for many children, is it appropriate for taxpayers to subsidise ever greater access to it?
We’re living through the bad times
The first task of government is to look after the people, but sober good sense seems to have fled the political stage, submerging us under a seeping mist of disorder.