The government will cut the student debt of around 3 million students as cost-of-living pressures continue to create pain.
However, in an unrelated move, hundreds of thousands will also be financially better off when repayment thresholds to student loans are changed on July 1.
The May 14 budget will also contain a measure to index all HECS debts to the lower of the consumer price index or the wage prices index in any given year, which was recommended in a major review of the tertiary education sector. The most recent federal data shows that in the past decade, the average debt has risen from $16,000 taking 7.2 years to repay, to $26,500, taking 7.9 years.
He said the government had a paper “windfall” over the past year from the spike in HECS debt from indexation “so you could argue they’re simply reversing that and neutralising this as a political issue”.
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