The dark reality of Anthony Albanese's pledge to slash university student debt

Daily Mail​

2 days ago

Anthony Albanese 's pledge to slash university student debt by 20 per cent is an unfair policy that will end up favouring the rich, new analysis shows.
Labor was resoundingly re-elected in May with a plan to cut student debts by an average of $5,520 with more than three million Aussies having $16billion wiped from their loans on June 1 this year.
The total relief approaches $20billion, with the government also reducing student debt by another $3billion by indexing it to either the consumer price index or the wage price index - whichever is lower.
The e61 Institute think tank argues Labor's student debt relief policy is unfair because it will mainly benefit those who go on to earn higher salaries later in life.
University graduates are much more likely to be paying off a Higher Education Loan Program (HELP) debt rather than a vocational or apprenticeship loan.
More than half the benefits of the student debt relief would go to individuals who went on to become the top third of income earners a decade later, with less than 20 per cent of the benefit helping the bottom third of income earners.
'Most of the benefits of a student debt cut will go to future high-income earners,' the research note by Jack Buckley and Matthew Maltman said.
'This raises vertical equity concerns because a student debt cut disproportionately benefits individuals with very high lifetime incomes, and not those with low lifetime incomes.'
Even with the debt relief, the e61 Institute calculated that only 20 per cent of students would pay off their debt a year earlier as a result of the debt cuts.
The benefit would also disproportionately favour graduates in this financial year.
'Our analysis suggests that individuals who leave university in the year the policy is implemented will receive a debt cut that is more than twice as large as individuals who left only four years earlier, or four years later,' it said.
'Otherwise similar individuals who studied the same degree at slightly different times receive very different levels of debt relief.'
Average student debt stood at $27,640 in 2023-24, based on tax office data.
University graduates, however, often go on to earn higher salaries compared with those who didn't go to university.
'Individuals who attend university, on average, go on to earn higher incomes than those who do not,' it said.
'People under 30 with a HELP debt in 2012 went on to earn almost $15,000 more per year, on average, than individuals of the same age who did not have a HELP debt.
'The university earnings premium is higher for individuals with a higher HELP debt.'
Medical specialists are typically among the top one per cent of income earners, after going to university.
Surgeons have Australia's highest average taxable income of $472,475 and this professional requires a Bachelor of Medicine and postgraduate study in a specialty.
Outside medicine, finance dealers have the highest incomes of $355,233, after studying finance, commerce or economics at university.
Mining engineers have typical pay of $206,423 after doing a degree in engineering while judges and lawyers have average incomes of $206,408 after doing a law degree.
The Higher Education Contribution Scheme replaced free university education, which had existed from 1974 to 1989.
This meant students would start paying back their loans when their salary reached a certain level instead of taxpayers, who never went to university, funding their study.
Under Labor, the minimum income threshold for repaying student debt has increased to $67,000 for 2025-25, up from $54,435 in 2024-25.
While it marks a significant jump, the new minimum repayment threshold is still below Australia's median salary of $72,592 for all workers.
The Albanese Government's student debt relief policy has been popular with younger voters, with Labor picking up three lower house seats from the Greens, including that of former leader Adam Bandt.