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Australia encouraged to wipe student debt over legislating stage three tax cuts

For Australians like James, the idea of not having his student debt following him around each week would be “life changing”.

“It takes a huge chunk of my wage; I didn’t realise how much it would be when I was younger,” the 27-year-old executive officer told NCA Newswire.

He has been working full time since he graduated in 2016, but estimates he still has around $50,000 to pay back.

While he wouldn’t change pursuing higher education, he acknowledges the cost of it adds up.

“I could be spending that money otherwise in the economy. I make decent money and I’m honestly scraping each week and can’t save,” he added.

More than 2.9 million Australians have an average of $24,000 in HELP debt, according to the parliamentary library.

Australian money, currency or cash
Camera IconIt now takes an Australian over nine years to pay back their student debt. Credit: istock

That’s up from $15,191 in 2012.

A typical student takes an average 9.4 years to repay the loan.

The idea of waiving student debt is a hot-button issue in the US, where unpaid loans have skyrocketed to $1.7 trillion.

But a bold new plan could see it enter the Australian conversation.

Instead of legislating the government’s stage three tax cuts, the Greens will propose waiving 20 per cent of outstanding HELP student debt each year over five years from next January.

It would come at a cost of $33bn over the forward estimates and $60.7bn over the decade.

Stage three tax cuts would cost $184bn over the next decade.

Table comparing the benefits of wiping student debt and stage three tax cuts.
Camera IconComparing the benefits of wiping student debt and stage three tax cuts. Credit: Supplied

“Many current MPs, including the Prime Minister, went to university when it was free,” Greens education spokesperson Mehreen Faruqi said.

“But now students are being saddled with tens of thousands of dollars in study debt that often takes decades to repay.”

An analysis of the proposal, undertaken by the Parliamentary Budget Office, revealed low and middle income earners would experience a greater benefit from the student debt forgiveness scheme.

“Instead of giving tax cuts to billionaires, wiping student debt is a fairer and cheaper way of easing cost of living pressures,” Greens leader Adam Bandt said.

Angus Haigh, an economics student at the University of Queensland, said he would be happy to see his debt wiped.

UQ student Angus Haigh who talked to NCA Newswire about HECs debt.
Camera IconUQ student Angus Haigh who talked to NCA Newswire about HELP debt. Credit: Supplied

“But I think the general public would be against it,” he told NCA Newswire.

“It would have given me more certainty in what I should choose and I know for friends who didn’t go to uni, it probably would have made them more likely to go.”

The government has already committed to wiping the student debts of general practitioners and nurse practitioners who go rural or remote.

Those who spend the equivalent amount of time on their degree – generally four to six years – in regional cities and towns with populations between 50,000 and 5000 will have their HECS or HELP debt wiped.

But there has been little to no interest in expanding the program further.

In a statement, a spokesman for the Department of Education, Skills and Employment said “debt forgiveness was a matter for the ATO”.

 

Student and NUS education officer Luc Velez
Camera IconStudent and NUS education officer Luc Velez said HELP debt was a hot topic on campus. Credit: Supplied

UNSW student and NUS education officer Luc Velez said he rejected the notion that HELP debt was “out of sight, out of mind”.

“I think it’s very much in the minds of people. Just because you’re not paying it upfront, it still looms in the mind that you know, I’m in debt,” he told NCA Newswire.

“It’s totally an ever present thing that hangs over us when we’re studying.”

Back in Bendigo, James said he would rather have his debt wiped now over the possibility of a tax cut in the future.

“I’m not against tax. I would just rather see the benefits sooner rather than later,” he said.

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