Student debt payments would fall in new cost of living proposal

Workers with student loans will see their payments reduced by an average of $680 per year.

The Government’s latest measure to combat the cost of living crisis aims to boost the wages of a million young Australians.

Under the new arrangements, the minimum repayment threshold will rise from $54,000 to $67,000 next July and will be indexed to remain at 75 percent of graduates’ average earnings.

The government says it will help all graduates earn up to $180,000 a year and give young people a break in the workforce.

For someone making $70,000 a year, the minimum annual payment would be cut by $1,300, while someone earning $80,000 would save $850. The average HELP debt repayment would drop by about $680.

Prime Minister Anthony Albanese will announce changes to how HELP loans are repaid on Sunday ahead of Parliament’s week.

A University Agreement report submitted to the government in February said existing repayment arrangements disproportionately penalize people on low incomes, particularly women, and create incentives for graduates to limit their working hours to prevent them from moving into the next income band.

He recommended moving to a marginal system, where payments were levied only on income above each threshold rather than on a person’s entire income, acting in the same way as an income tax.

The legislation has not yet passed the Senate but is expected to be supported by the Coalition.

New changes will be introduced to parliament early next year.

Mr Albanese said Labor governments would always help people under pressure and build a future.

“Labor will always be the party of education. No matter where you live, no matter how much your parents earn, we will work to keep doors of opportunity open for you,” he said.

“We will make it easier for young Australians to save in the future, while also making the system better and fairer.”

He called the changes good for the cost of living, intergenerational equity and building the nation’s future.

Mr Albanese’s speech on Sunday at a campaign rally in Adelaide alongside popular South African Prime Minister Peter Malinauskas will be the first in a series of addresses he plans to lay out his second-term agenda.

“This will form the basis of the positive and ambitious agenda we deliver to the Australian people at the next election,” he said before the speech.

The prime minister promised his colleagues that they would go into the mid-May elections with a compelling story to tell in terms of the government’s performance and plans for the future.

He wants next week’s parliamentary session to focus on education, with debate on bills to fund schools and increase pay for childcare teachers.

But over the past month, the government’s agenda has been mired in distractions and controversies – including over the Prime Minister’s purchase of a new home and vehicle upgrades – and questions have been repeatedly raised about Mr Albanese’s decision.