Australians should pay back their university loans sooner to slash soaring debt costs to the Commonwealth, a think tank recommends.
The Grattan Institute report, released on Tuesday, says cutting the income threshold for HELP loan repayments from $54,126 to $42,000 would save $500 million every year while maintaining the program's effectiveness.
Education Minister Simon Birmingham is looking at the issue, saying funding of university students had essentially grown at twice the rate of the economy.
"The costs to taxpayers of higher education have, over recent years, grown dramatically," Senator Birmingham said in a statement.
The minister was consulting widely on changes to the higher education sector.
"I welcome all ideas from the sector, experts and students on how to make university funding sustainable."
The report concluded an estimated $1.6 billion in loans in 2014/15 wouldn't be paid back to the Commonwealth and interest costs on outstanding debt cost $200 million.
The institute said while the program was vital, too many students were either not repaying their debts or taking too long to do so.
The government last year introduced changes to recoup HELP debts from students who were living overseas.
Senior government minister Scott Morrison said it was something the government had to look into while warning the underlying problem was with employment.
"The whole point of these HELP loans is that people get to go and study so they can get a job and pay it back," he told 2GB on Tuesday.
"We've got a lot of people out there who have gone and got a tertiary education and aren't in a job where they can pay back the debt.
"I think that's the bigger problem."
The Australian Greens urged the government to stop viewing students as "cash cows" and abandon the idea of lowering the threshold.
Greens senator Robert Simms said the move would force financial strain on new graduates and prevent them saving for a house or family.
"Not only is this particular revenue raiser not needed, it's straight out of the Abbott playbook of making life harder for those who can least afford to pay," Senator Simms said in a statement on Tuesday.
