Labor’s bill to slash Hecs debt likely to pass with Coalition support despite Greens demand to end indexation | Australian education

Labor’s student debt relief is likely to sail through parliament despite a Greens push for Labor to end indexation of Hecs debts and wind up Coalition-era fee hikes for humanities courses.

Labor’s legislation to lower Hecs debt levels by about 20% for about 3 million graduates will be the first government bill to be introduced to the new parliament on Wednesday.

It is expected to deliver savings of about $16bn, and lift the repayment threshold for taxpayer-supported loans from $54,000 to $67,000.

The measures are being sold as providing cost-of-living relief for young Australians, who hold the bulk of student debt. Labor says the average student debt would be reduced by about $5,500.

It’s likely the bill will be passed by both houses in coming weeks, after consideration of an amendment from Kooyong independent MP, Monique Ryan.

The Greens hold the sole balance of power in the Senate, but Coalition support means the bill will pass regardless of the minor party’s push for amendments.

Despite this, the Greens higher education spokesperson, Mehreen Faruqi, said she would move Senate amendments ending indexation rules for higher education loans and winding up the Morrison government’s job-ready graduates scheme, introduced in 2021.

“While every bit of student debt relief is good, what the government is doing by wiping some student debt doesn’t even touch the sides of the issue,” Faruqi said on Tuesday.

“The core of the problem is indexation. Unless indexation is removed, students will be in this hamster wheel always chasing their debts, which keep getting bigger and bigger.”

The job-ready graduates scheme was designed to push more students into disciplines that would drive the jobs of the future, by lowering the cost of degrees in courses such as computer programming and engineering.

Costs for courses deemed less worthy, including in the humanities, doubled as part of the changes.

But a University of Melbourne study in 2023, found the fee changes affected the enrolment decisions of only 1.5% of students, suggesting the policy had failed to drive behavioural shifts.

Faruqi said job-ready graduates had pushed the cost of an undergraduate arts degree to $50,000.

“The Universities Accord process was very clear in their recommendation. They said that there should be something urgent done to look at the unfairness and the fee increases of the job-ready graduates package.”

Coalition education spokesman Jonathon Duniam said he expected Liberal and Nationals MPs to support the government’s bill.

“It was an issue, one of the centrepieces of the government’s agenda at the last election and obviously we had a view that was not supported by Australians, so we’ll work with them,” he told Sky.

“We have our concerns, they remain. We’ll talk about those, but I expect them to pass Parliament.”

Leading economic think tank the e61 Institute this week recommended the government cut student loans by a flat $5,500, saying that would be a fairer and more effective way of providing relief than Labor’s promised 20% reduction.