Australia has officially passed legislation to reduce student loans by 20%, delivering over A$16 billion (US$10.3 billion) in debt relief to 3 million Australians in a sweeping move to alleviate the rising cost of living.
The new law, passed Thursday by parliament, marks the first legislative act of Prime Minister Anthony Albanese’s center-left Labor government since its landslide re-election in May. The policy fulfills a flagship campaign promise aimed squarely at young voters burdened by higher education debt and economic strain.
“We promised cutting student debt would be the first thing we did back in parliament – and that’s exactly what we’ve done,” Albanese said in a statement. “Getting an education shouldn’t mean a lifetime of debt.”
Under the new law, an average university graduate with a loan of A$27,600 will see A$5,520 wiped from their balance. The debt relief will be backdated to June 1, 2025, before the loans were set to be indexed at 3.2% for inflation.
In addition, the minimum repayment threshold has been raised from A$54,435 to A$67,000, meaning lower-income earners will contribute less, or nothing, toward their student debts under the revised income-contingent repayment scheme.
Education Minister Jason Clare said the policy would significantly ease financial pressure on younger generations. “Young Australians don’t always see something for them on the ballot paper, but they did this year and they voted for it in their millions,” he said. “And we’re repaying now the trust that these young Australians have placed in us.”
Millennials and Gen Z voters accounted for 43% of the 18 million enrolled to vote in the May general election, outnumbering Baby Boomers for the first time. Labor’s targeting of student debt resonated with this group, framing the relief as a way to address intergenerational inequality and financial insecurity.
The reform is part of a broader strategy by the Albanese government to address economic challenges, particularly the rising cost of living that has dominated public concern.
Written By Rodney Mbua
