The federal government's proposal to revamp student loan repayments, particularly by raising the income threshold for loan repayment and reducing student debt, has stirred up a range of opinions among economists. The plan put forth by the Albanese government aims to lessen the financial burden on university students by increasing the threshold at which individuals must start repaying their Higher Education Loan Program (HELP) debt and reducing existing student loans by 20%. These changes, if implemented post-election, would primarily benefit individuals with current student loans as of June 1, 2025.
Economists, including Bruce Chapman and Angela Jackson, have lauded the decision to elevate the income threshold for loan repayment, emphasizing its impact on recent graduates and those on lower incomes. However, some experts, such as Richard Holden and Jack Thrower, point out that while the proposed reforms may alleviate student loan burdens to some extent, they might not directly address the broader issue of escalating costs associated with higher education. Holden expressed concern that the reduction in repayments and total debts would have minimal impact on alleviating cost-of-living pressures, suggesting that the economic ramifications could lead to a significant increase in national debt.
The current debate on the government's plan to overhaul student loan repayments also touches upon the divisive topic of degree costs, particularly in the context of arts degrees becoming significantly more expensive in recent years. Some economists argue that while reducing student debt by 20% is a positive step, it does not tackle the root problem of high degree costs. The experts interviewed by ABC News unanimously call for more substantial measures to address the sustainability and affordability of university degrees, with Professor Chapman highlighting the need to reverse the price increases seen in humanities degrees as a critical step towards making higher education more accessible.