Australia to cut $10 billion in student debt due to cost of living pressures

(Source: Reuters)

Australian Prime Minister Anthony Albanese said his government plans to cut student loans by 20% for about three million Australians, forgiving about $16 billion in debt.

The move builds on May’s budget, which tackled cost-of-living pressures in Australia and offered debt relief for students, as well as more investment to make medicines cheaper, and a boost to a rental assistance program.

“This will help anyone with student debt right now, while we work hard to deliver a better deal for every student in the coming years.” Albanese said in a statement announcing the reduction of student loans for tertiary education.

The changes would mean the average graduate with a loan of A$27,600 would forgo A$5,520, the government said, adding that they would come into effect from June 1, 2025.

The government said it already plans to reduce the amount Australians with student debt must repay each year and increase the threshold to start repaying.

If Labor is re-elected at the next general election, due in 2025, he would also legislate to guarantee 100,000 open places each year at the country’s technical and further education institutions, Albanese said.

“This is a time to build and build better education for all,” he said in a speech to supporters in Adelaide, the capital of South Australia state.

Pressure on the cost of living, fueled by persistently high inflation, has particular resonance as the federal election approaches and the centre-left Labor government is now rallying behind its Conservative opponents.