Three million Australians will have their student debt slashed as Labor passed the highly anticipated legislation through parliament.
As promised to voters, the Albanese government introduced the HECS debt bill to cut 20 per cent from existing university and TAFE debts as its first order of business last week.
It passed the Senate on Thursday morning, 36 votes to three. Crossbenchers David Pocock, Fatima Payman, and Tammy Tyrrell all voted with the government and the Greens.
Education Minister Jason Clare said the average $5,500 that Australians would save is a "big deal".
"That's a lot of weight off their back, and it will help a lot of young people that might be just out of uni, just out of home, just getting started," he told reporters before introducing the bill in the House of Representatives.
Here's how they'll work.
When can I expect my student debt reduction?
The Universities Accord Bill will apply a one-off reduction to student support loans including HELP, VET Student Loan and the Australian Apprenticeship Support Loan.
The cut will apply to debt levels retrospectively, before the 1 June indexation, but will take a few months for the Australian Tax Office to implement.
Balances are expected to be revised by the end of the year, saving students and graduates roughly $16 billion.
How is the repayment system changing?
The changes include reforms to the repayment system, ensuring compulsory repayments are marginal, as recommended by the Australian University Accord.
The threshold at which students are required to start paying back their loans will be lifted from $54,435 to $67,000.
Under the old system, an Australian earning $70,000 would have paid back $1,750 annually. Following the changes, this will be reduced by $1,300 to $450.
The measures are a recognition that course fees have increased — spiking under the Morrison government's Jobs-ready Graduates package — and younger Australians are paying high fees at a time when they are also looking to buy their first homes and start a family.
The adjustments do not apply to people earning above $180,000.
Could other reforms be on the way?
Clare has flagged that further reforms are being looked at, particularly concerning the former Liberal government's job-ready graduates program.
The program aimed to fill skills shortages by making it cheaper to take courses such as teaching, nursing and psychology, while doubling the cost of popular degrees including law, communications, business, humanities and the arts.
The universities' accord final report branded the program "deeply unfair" last year, recommending that fees reflect future earning potential as part of 47 recommendations to reform the sector.
Universities Australia chief executive Luke Sheehy has welcomed the HECS bill but called on the government to repeal the jobs-ready graduates scheme.
Bruce Chapman, the economist who developed the HECS system, similarly said the top priority should be reviewing the price of each degree, because humanities students finish with the highest level of debt and end up being the lowest-paid graduates.
— With additional reporting by the Australian Associated Press
