Student loan debt to be slashed under re-elected Labor government
A re-elected Labor government will cut 20 per cent off student loan debt for all students and apprentices, as Albanese shifts Labor into election mode.
Australia can boast on the world stage the presence of its world class universities, the envy of many international students in China, India, Nepal and other Asian nations. In just 2024 alone, Australia has over 790,000 international students studying in universities, a 11 per cent increase since last year. However, this testament to Australia’s multicultural success story has come with a hefty price tag – with HECS-HELPs reaching $75.1 billion in 2024.
Touching down in Adelaide, Prime Minister Anthony Albanese vowed to the party’s faithful to wipe 20 per cent off student loan debt in an effort to both reset the national conversation (following his month from hell) and prepare Labor for an election campaign that will likely be down to the wire.
However, the decision to wipe student debt raises questions about whether normalising politicians wiping debt at times of political disadvantage risks exploiting young people for votes and whether Labor even needs to do this.
Albo’s war against student debt
Prime Minister Anthony Albanese announcing the election promise | news.com.au
Starting November at a low point, Albanese appeared at Norwood International High School in South Australia, launching an unofficial campaign for re-election which borrowed heavily from presidential performances in the United States. The Prime Minister was preceded by ministers Penny Wong and Jason Clare, who energised the crowd for a clearly buoyant Albanese joined by popular Premier Peter Malinauskas. The rally, which had been carefully organised, stood in a clear contrast to the Prime Minister’s rollercoaster October, which saw the Queensland Labor carriage fall off, and allegations of misconduct over the Quantas affair. Standing before the crowd, Albanese announced a re-elected Labor government would cut 20 per cent off all student loan debts, including HECS-HELP, VET, Apprenticeship Support Loan, and other income-contingent student support loans by June next year. This decision would remove approximately $16 billion of student debt for over 3 million Australians. This means that someone who holds the average HECS debt of $27,600 would see $5,520 wiped from their balance. This builds upon Labor’s previous reforms to student debt indexation, which cut $3 billion following a painful 7.1 per cent increase between 2022–2023 and aims to prevent large increases like that from happening again.
If re-elected, Labor would have shaved $20 billion in student debt since coming to power - a message the Prime Minister is eager to get into the public spotlight. Speaking on the proposal, Anthony outlined this policy to show his government’s commitment to students.
“No matter where you live or how much your parents earn, my Government will work to ensure that doors of opportunity are open for you.”
Minister for Education, Jason Clare, who has also been experiencing political controversy given his role in soliciting free upgrades from Qantas Airlines, used this rally to demonstrate Labor as a party committed to empowering young Australians.
“This is a game-changer for the more than three million Australians with a student loan.”
Student debt, the new political tool?
Prime Minister Anthony Albanese at Sydney Town Hall | facebook.com
Student debt has become a prominent issue for many young people, and is often viewed with the same priority as climate change and cost of living. Despite this, student debt has only garnered political attention in the last couple years. In particular, the issue of cost-of-living, which has caused many politicians globally to fall behind polls, has created momentum for action against rising student loan debts to energise the youth vote.
Earlier this year, in an effort to turn around his flailing poll numbers, US President Joe Biden passed executive orders aimed at forgiving the debt of millions of American students. These measures, which were supported by as much as 70% of younger Americans, were seen by the Biden administration as an avenue to increase its standing amongst younger voters. These efforts ultimately failed due to partisan Republican-controlled states and judicatures blocking the orders on the grounds that the President didn’t have authority to make those decisions.
In Australia, the issue of student debt has long been debated across universities and social media comment sections, however, never to the attention of politicians - excluding the Australian Greens. A Greens aligned poll conducted by Lonergan found 77 per cent of Australians with student debt were concerned about the issue earlier this year, however, it is unclear how many support the government forgiving student debt. However, given that three million Australians hold a student debt, this has likely motivated Labor to address the issue. Recent polling undertaken in early October has shown Labor’s lead over the Coalition weakening, with The Australian newspaper’s NewsPoll finding the Coalition ahead of Labor in two party preferred for the first time since the last election. Labor, which is likely less than six months out from another election campaign, would be concerned by these numbers and looking for any excuse to win over 3 million Australians.
This motivation to fix issues regarding student debt, such as forgiveness, has garnered criticism from student groups who fear political parties are exploiting the issues only for their benefit near election time. In particular, the National Union of Students president Ngaire Bogemann, dismissed the government’s plans.
“If you want to talk about creating a fairer and more accessible higher education system, wiping debts [by] 20 per cent is not actually getting to the root cause of the issue.”
“This seems a bit of a disingenuous attempt to bring some people in, vote-wise, and not an attempt to actually create change.”
Young people and Labor
Prime Minister Anthony Albanese with Western Australia Premier Roger Cook amongst a group of young people | facebook.com
The other issue for Labor, is that younger voters already vote favourably towards them then to the Coalition. Following the 2022 Federal election, younger voters (18–34) aligned more with the left-wing parties: 31 per cent voted for Labor alongside 22 per cent for the Greens (equating to 53 per cent) versus the 27 per cent that voted for the Coalition. For the Labor party, whose aim to is to win re-election, using issues such as student debt to frame their campaign, may only serve to alienate older voters, especially those in their 30s to 50s who are far more likely to ditch Labor for the Coalition due to cost-of-living pressures.
Stella, a first-year law and business student at University of South Australia, argued this forgiveness should prioritise students who have completed studies rather than those currently studying.
“I wish this happened for the end of my degree because it would have had a higher impact. I’m not really benefiting from it because I'm only in my first year, it would be nice if this carried over to when I graduate.”
Whilst the act of forgiving student debt itself isn’t necessarily a bad decision, chronic reliance on it only risks politicising the issue between the major parties and preventing objective reform from occurring. It would be far more reasonable and practical that, instead of falling to populist tendencies, the Labor party prioritised a policy on reforming student debt that included not only forgiveness, but reforms to indexation that enabled young people to have greater credit scores that give them a greater competitive foot in the housing market and obtaining loans. This could both expand Labor’s support to conservative leaning young people, but also support older demographics experiencing hardships as a result of student debt.
Ultimately, for a Prime Minister who endured loss after loss across October, the opportunity to reset the national conversation to the next election will be a comforting one.