Reducing student debt benefits young people. But boomers always win

If you want to know how successful Australia’s long-term war on youth has been, look no further than recent birth statistics. Having children is the one thing young people do that most of us don’t do. And our birth rate has fallen to an all-time low because people can’t afford to have children. In case you were wondering, there is compelling evidence that there is an almost direct link between rising house prices and falling birth rates. This is likely even more true in a market like Sydney, where some dual-income families struggle to afford a mortgage.

Not that high housing costs and the demands they place on young people are the only front of the war. Young people face higher inflation than older people and are more likely to be exploited by employers. And they will be the ones who suffer most from oil state Australia’s obsession with fossil fuels as the global warming crisis wreaks economic havoc in the coming decades.

One of the key tactics used by politicians to impoverish young people is education debt. Beginning in the 1980s as a rational method of requiring beneficiaries of higher education to contribute to its cost (even if older generations never faced such demands), in subsequent decades it began to form another economic burden that young people had to bear. This required that young people, if they did not have access to sufficient wealth to pay for education up front, would have to enter the job market with large debt that could reach six figures, thereby further delaying their ability to buy a home.

Albana’s government has already reduced debt indexation, an almost trivial change caused by the absurdity of linking government levies to inflation. Yesterday’s announcement that Labor will significantly raise the income thresholds for repayment, adjust the repayment assessment to take into account incomes above the new threshold and cut 20% of debts represents a much more significant contribution to the living standards of young people from mid-2025.

This statement inevitably came under attack from those who represented the interests of older generations – right-wing economists and Financial review denounced it as unfair, demonstrating a sudden interest in justice that is usually absent from their comments. Perhaps now we can wait with confidence AFR and neoliberals such as Stephen Hamilton decrying other parts of the tax system that are unfair, such as negative gearing, or super concessions for the very rich, or the revamped rental scheme, or franking credits that are failing. Or maybe we shouldn’t hold our breath?

The opposition also condemned this. Shadow Education Minister Sarah Henderson and Invisible Man Angus Taylor issued a press release saying it was “not just grossly unfair to the 24 million Australians who have no student loans, but especially to graduates who have saved up very big debts.” This is the party that is widely believed to have dramatically worsened the student debt problem by changing tuition to attack critical thinking and liberal arts degrees.

Then again, the Coalition is a party of old men, so this is not surprising. One of the few policies she has committed to (besides burdening young people and future generations with not only the cost of the climate crisis but also hundreds of billions of dollars in taxpayer debt from her proposed nuclear power plants) is her policy to allow people access to their pension to buy a home, which will increase demand for housing by billions of dollars and increase home prices. The effect of this policy would be a direct transfer of wealth from young people to older people owning homes, effectively shifting the retirement savings of young people directly to asset owners, leaving the former no better off.

But in the absence of reforms to housing supply and affordability, this is the fate of any scheme that increases young people’s incomes. Cutting HECS debt for young people will simply free up money for them to put towards buying houses, pumping billions back into housing demand and driving up prices, leaving them little better off than when they started unless we start building a lot . more housing.

Boomers and Gen Xers have rigged the game: Until we fix the housing situation, nothing that makes life easier for young people will go anywhere except to older asset owners.