Australia to Slash $2 Billion in Student Debt

Australia's government plans to eliminate nearly $2 billion in student loans, benefiting over three million individuals, amidst ongoing economic challenges stemming from inflation and cost-of-living pressures.

The announcement was made by Education Minister Jason Clare as part of the Albanese government's monthly budget, aimed at alleviating financial burdens on both workers and students.

Under Australia's system, university students can access interest-free loans to fund their studies, with repayments automatically deducted from their future salaries.

However, steep indexation increases have led to some debts growing, despite regular repayments.

To address this issue, the government has proposed retroactively capping the indexation rate for student loans at the lower of either the Consumer Price Index or the Wage Price Index from June last year.

This move aims to mitigate the impact of the previous year's record indexation rate of 7.1%, reducing it to 3.2%.

According to Clare, this adjustment will nullify the effects of last year's increases and prevent similar occurrences in the future. Pending legislative approval, students with an average debt of $26,500 can expect a reduction of around A$1,200 this year.