University graduates could save hundreds of dollars a year in student debt repayments under the federal governments flagged shake up of the HECS system. The reforms are continent on the Albanese government being re-elected and would also allow graduates to earn more before having to start their repayments.
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00:00A pre-election pitch to younger Australians, struggling amid a cost of living crunch.
00:09Everybody earning up to $180,000 a year will pay less every year in their student debt
00:15repayments.
00:16The government unveiling an election commitment to reduce the burden of student debt months
00:21out from the election.
00:23What this will do is help people who are just starting out, who've just finished uni, who've
00:27just finished TAFE, and they've now got to pay the bills, pay the rent, or a saving for
00:31a mortgage.
00:32Three million Australians would benefit from the changes, which would be introduced to
00:36parliament if the Albanese government is returned at the next election.
00:41They'd include a shift to a marginal repayment system, similar to the income tax thresholds,
00:46where you pay a set rate per dollar over a certain level, rather than a percentage of
00:51total earnings.
00:53Graduates could also earn more before they have to start repaying the debt, with an increase
00:58to the minimum repayment threshold from $54,000 to $67,000.
01:03The average university graduate will be $680 better off a year under the changes.
01:09For graduates earning $70,000 a year, their repayments will fall by $1,300.
01:15Those on $80,000 will pay $850 less.
01:20And it's got the approval of the original architect of the scheme.
01:23HECS has been wrong for about 35 years, collecting on the basis of total income.
01:29I don't think it's mattered a lot overall, but it has certainly disadvantaged people
01:34at those crunch points.
01:36Students are mostly on board.
01:37There's so much more you can do with that extra money, especially when you're young
01:41and you're trying to start up your life.
01:42I think it would be a huge difference.
01:45I think it would really open up a lot of opportunities for people.
01:48It's a good idea, but I do think more needs to be done.
01:51The spare money would be good, but probably just use it to keep repaying it anyway.
01:56The government's suite of reforms to tackle student debt, including some yet to be announced,
02:01won't come cheap.
02:03But the government insists they'll go some way to addressing generational inequality.
02:08The opposition isn't on board, arguing the reforms risk signing young people up to a
02:13lifetime of debt.