Australia Cuts Student Loan Debt by 20 Percent, Helping Millions

In a significant legislative move, Australia has passed a new law that will cut student loan debt by 20%, leading to a relief package exceeding A$16 billion for around three million Australians. This decision is particularly aimed at reducing the financial strain on younger generations and marks the first significant achievement of Prime Minister Anthony Albanese’s Labor government since its re-election in May.

Albanese expressed the government’s commitment to addressing student debt from the outset, affirming that education should not lead to lifelong financial burdens. He emphasized that this debt reduction is a fulfillment of a key promise made during the election campaign by the center-left Labor Party, which highlighted issues of growing living costs and intergenerational financial disparity as its main concerns.

Education Minister Jason Clare underscored the importance of this measure, suggesting it would alleviate considerable stress for younger Australians. He noted the significant voter turnout from millennials and Generation Z, who constituted 43% of registered voters in the recent election, and reiterated the government’s intention to honor the trust placed in them by the younger electorate.

The legislation will result in substantial financial relief for individual borrowers; for instance, a graduate with an average student loan of A$27,600 can expect to see A$5,520 wiped off their loan balance. This policy will take effect retroactively from June 1, 2025, before the implementation of a scheduled 3.2% loan indexation for inflation.

Additionally, the new law modifies the income threshold for student loan repayments, raising it from A$54,435 to A$67,000. This adjustment will allow low-income earners to pay less over time and may postpone their repayment obligations until their earnings surpass the updated threshold.