Three Million Australians to Receive 20% Student Debt Cut in Largest Reduction in History
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Three million Australians will have their student debt slashed by 20% starting this week, Education Minister Jason Clare announced Wednesday, describing the measure as “the biggest cut to student debt in Australian history.”
Minister for Education Jason Clare (Labor, Blaxland, NSW) told Parliament that 1.5 million Australians would receive notification of their debt reduction on Thursday, with another 1.5 million receiving the same notice the following week.
“Tomorrow, one and a half million Australians will have their debt cut by 20 per cent. And next week, another one and a half million Australians will have their debt cut too,” Clare said during Question Time, describing the measure as the fulfilment of an election commitment.
“We promised it, Australia voted for it, and we’re delivering it,” Clare added.
The debt reduction forms part of the government’s response to the Universities Accord review and aims to address concerns about the rapid growth in student debt balances, which have been compounded by inflation-linked indexation. Under the changes, HELP and HECS debts will be reduced by 20% across the board.
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Clare used his parliamentary response to contrast the government’s education agenda with what he characterised as Liberal Party policy that previously increased student debt burdens. He did not miss an opportunity to reference popular culture, quoting rapper Kendrick Lamar to criticise the Coalition.
“Under the Liberals, bulk billing was on life support. They froze rebates and slashed billions of dollars from hospitals. As Kendrick Lamar would say, those Liberals, they not like us,” the Member for Bennelong had stated earlier in proceedings, with Clare adopting a similarly combative tone.
The Minister outlined a suite of additional education measures being delivered alongside the debt reduction. Paid practical placements for teaching, nursing, midwifery, and social work students have now commenced, providing financial support during compulsory training periods.
“Paid prac has now started. That’s financial support for teaching and nursing and midwifery students, social work students while they do their practical training,” Clare said.
He announced that more Australians would study medicine in the coming year “than ever before,” following expanded places announced in conjunction with the Health Minister. Additionally, 25,000 Australians will be able to access free bridging courses to prepare for university degrees.
Clare also introduced legislation to establish the Australian Tertiary Education Commission, which he said would work to “break down the barrier between TAFE and university.” He cited the University of Canberra’s announcement that it would credit a full year off degree programs for students who have completed relevant diplomas.
“This is for nursing, for early education, for graphic design and accounting and a few other areas. This saves you time. It saves you a year off your degree, but it also saves you money — on average about $6,000 off the cost of a degree,” Clare said.
The reforms align with the government’s broader education policy framework, which has emphasised both vocational and university pathways. The free TAFE initiative has now supported more than 700,000 Australians, according to Prime Minister Albanese.
“Some people reckon that you don’t value something if it’s free. Well, there’s more than 700,000 Australians benefit from free TAFE. Because we want to make sure in all of our policies that we have an economy that works for people, not the other way around,” Albanese said during Question Time.
The student debt reduction has been a signature policy of the government’s second term, announced during the May 2025 election campaign as part of a broader cost-of-living package. The measure applies retrospectively, reducing existing debt balances rather than just prospective charges.
Students and graduates will receive electronic notifications advising them of their reduced balance. The government has invested in awareness campaigns to ensure debtors understand the change, with the Australian Taxation Office coordinating communications.
The policy addresses longstanding concerns that HELP debt indexation — linked to CPI — was causing debt balances to grow faster than borrowers could repay them, particularly during periods of high inflation. Consumer advocates had warned that some graduates were seeing their debts increase even as they made regular repayments.
Critics have questioned whether the debt reduction adequately addresses structural issues in higher education funding, including the “Job-ready Graduates” fee increases introduced under the Morrison government. When asked about student debt during his Press Club appearance, Shadow Treasurer Ted O’Brien acknowledged it was among the issues where young Australians “are being let down” and promised Coalition policies would be announced “before long.”
The government has framed the debt reduction as part of a broader agenda to improve educational access and affordability. Clare concluded his parliamentary remarks by emphasising that the Australian Tertiary Education Commission would drive “real long-term reform” to create “a more joined-up system.”
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