Millions should soon see a decrease in their student debt. 

Education minister Jason Clare says the federal government’s forthcoming budget promises to alleviate the financial burdens of students and workers across the nation by erasing approximately $3 billion in student loans.

The planned reforms respond directly to recommendations from the Australian Universities Accord and are designed to prevent student debt from outpacing wage growth. 

Starting 1 June 2023, the HELP indexation rate will be capped at the lower of the Consumer Price Index (CPI) or the Wage Price Index (WPI), with additional benefits backdated to all relevant accounts as of the same date last year.

This measure stems from a significant spike in CPI indexation at 7.1 per cent last year, which would now be reduced to the WPI rate of 3.2 per cent. 

“We are doing this, and going further. We will backdate this reform to last year. This will wipe out what happened last year and make sure it never happens again,” Clare said. 

The changes also extend to other forms of educational loans such as VET Student Loans and Australian Apprenticeship Support Loans, broadening the scope of financial relief. Students and graduates, who were potentially facing another substantial indexation increase this year, can use the HELP Indexation Credit Estimator to calculate their expected benefits from these adjustments.

The measure is scheduled to be incorporated into the 2024 budget, pending parliamentary approval.