Student debt reforms are leading the Albanese government’s 2025 election promises.
The fundamental changes would reduce existing student debt by 20 per cent and raise the income threshold for repayments.
However, some say these measures don’t go far enough, with calls for free higher education back in the spotlight.
Can Australia afford free university? Find out here:
In this episode of The Briefing, Chris Spyrou digs into the proposals, asking what they mean for students, graduates, and the broader economy.
Joined by ANU Professor Andrew Norton and The Motley Fool Australia’s Chief Investment Officer, Scott Phillips – The Briefing explores whether these reforms are a step forward and whether Australia’s economy and tax system could handle making higher education free.
The benefits for people with existing student debts are clear, but how will it impact the broader economy? Professor Norton said the money no longer collected from students’ debts would need to be sourced elsewhere.
“The 20 per cent cut to the balances of HELP debt, that will probably knock, on my calculations, probably 12 or $13 billion of future repayment income for the government.
“That’s a sizable amount of money, and unless the government cuts spending, that’s going to come out of other programs, or it’s going to be fewer opportunities for tax cuts.
“The $67,000 threshold will mean people repay more slowly. Some people won’t repay at all, so there are additional costs there, but the big cost is the 20 per cent cut.”
But Mr Phillips said even with this all in mind, it is possible to see free university in Australia.
“It’s absolutely doable,” he said.
“Here’s the economic reality, right? You won’t hear politicians say we just can’t have everything we want because we don’t have tax revenue to pay for it all. So we have to make choices.
“We either say we’ll have that instead of that, or we’ll have that annual tax more to pay for it. “
You can hear more from Professor Horton and Mr Phillips on how they believe free university would impact all Australians by listening to The Briefing.