Labor’s Student Debt Relief ‘Economically Reckless’: Shadow Education Minister Says

Students sit on the lawn near the Faculty of Law building at The University of Sydney, in Sydney, Australia, on May 8, 2013. AAP Image/Paul Miller

Shadow Minister for Education Senator Sarah Henderson labelled Labor’s student loan discount scheme as economically reckless, unfair, and elitist.

Henderson told The Epoch Times in an email that the relief would apply as a one-off discount only.

She said it would provide massive benefits to those who completed multiple degrees while denying economic support to new students or those who have paid off their loans.

“With HELP indexation up an alarming 11.1 percent under Labor, three million Australians continue to pay the price of Labor’s economic mismanagement,” Henderson said.

Labor Promises Student Debt Relief

It comes after Labor revealed more detail into their re-election promise to cut student debt by 20 percent and reform in repayment arrangements.

University students and graduates with an average HECS debt of $27,600 will see around $5,520 (US $3,440) wiped.

Additionally, the minimum salary threshold for student loan repayments will lift from about $54,000 to $67,000 (US $34,000 to $42,000).

When broken down by state, Victorians receive the highest average cut per person at $5,755, while Tasmanians benefit the least with an average cut of $4,561.

New South Wales has the most people indebted in the schemes, with over 883,000 people owing more than $25 billion.

Minister for Education Jason Clare said Labor will wipe around a further $16 billion (US $10 billion) from all Australians with a student debt, if they win the next election.

“This is a game-changer for the more than three million Australians,” Clare said.

For someone on an annual salary of $70,000 (about US $44,000), repayments will be around $1,300 (US $810) less per year.

Building on Past Reform

The suggested changes build on last years reforms to fix the student loan indexation formula, which cut around $3 billion in student debt.

In December of 2024, the majority of Australians with student debt had received their credit or refund from the tax office.

“Last year we wiped $3 billion in student debt and this is the next step. All up, it means we are wiping close to $20 billion in student debt,” Minister Clare said.

The promised relief applies to HELP, VET Student Loan, Australian Apprenticeship Support Loan, and other student support loans. Australians can calculate how much their student debt could be reduced on the Department of Educations website.

Assistant Minister for Education Anthony Chisholm said HECS debt relief and changes to indexation are a major part of Labor’s plan to create a better and fairer education system.

“Wiping a further $16 billion in student debt will bring millions of current and former students a bit closer to paying off their student loans,” Chisholm said.

“But we’re not just cutting HECS debts, we’ve cut taxes, we’ve cut the cost of childcare and we’ve cut the cost of medicines too.”

Downsides of Proposed Changes

Professor in the Practice of Higher Education Policy Andrew Norton noted some disadvantages to the proposed changes.

Writing in The Conversation, Norton said the downside of reduced annual repayments is longer repayment periods and more indexation of HELP balances.

He said most people make compulsory rather than voluntary repayments, and although those holding debt now will see repayment times reduced after a cut, future borrowers will not have that benefit.

Previously, Shadow Treasurer Angus Taylor and Shadow Minister for Education Sarah Henderson said over 24 million Australians struggling with the cost of living crisis will see no benefit from this policy while all 27 million Australians will pay the price for it.

““For Australians who have seen collapsing living standards and disposable incomes under Labor, this is particularly galling when the people who benefit from this policy will tend to be higher income earners across their lifetime,” they said.