The Universities Accord (Cutting Student Debt by 20 Per Cent) Bill 2025 reduces HELP and related student loan debts by 20% for amounts owed on or before 1 June 2025 and reforms the repayment system by raising the minimum repayment threshold to $67,000 and applying marginal repayment rates only to income above that level.
These measures implement key recommendations of the Universities Accord to ease cost-of-living pressures, improve equity in higher education participation, and remove disincentives to work additional hours.
The Bill amends the Higher Education Support Act 2003, the VET Student Loans Act 2016, the Australian Apprenticeship Support Loans Act 2014, the Student Assistance Act 1973 and the Social Security Act 1991 to:
The debt reduction measure is estimated to cost $737.7 million, and the fairer repayment reforms $182.2 million. They respond to the Universities Accord’s recommendations to reduce the financial burden of student debt and support broader participation in tertiary education.
The Bill delivers immediate cost-of-living relief to around 3 million Australians by cutting their student loan debt by 20%, which boosts disposable income and overall welfare [Judgment]. Reducing this financial burden can increase consumer spending and improve mental well-being, generating positive spill-over effects across the economy.
Raising the repayment threshold to $67,000 and applying repayments only to income above that level protects low- and middle-income earners, aligns payments more closely with ability to pay, and removes disincentives to work extra hours [Judgment].
Making tertiary education more affordable advances social mobility and supports a highly skilled workforce, which is essential for national productivity and innovation [Judgment]. These reforms align with the Universities Accord’s goal of fostering a fairer, more accessible higher education system.
The 20% debt cut carries a high fiscal cost—approximately $920 million—which could be allocated to targeted grants, vocational training or improvements in school funding that yield clearer, long-term returns [Judgment].
Uniform forgiveness benefits higher-earning graduates and those with larger debts disproportionately, while those who paid off loans earlier or fell just beyond the cutoff receive no relief, raising fairness concerns [Judgment].
Retrospective debt cancellation undermines the principle that loans must be repaid to sustain the HELP system’s integrity and may encourage expectations of future bailouts, eroding personal responsibility for borrowing decisions [Judgment].
2025-07-23
Passed Both Houses
Unspecified
Education
Education, Social Support / Welfare