The Albanese government passed legislation through Parliament on Wednesday that will wipe $3bn of debt for Aussie students.
The policy will link HECS indexation to the wage price index instead of the consumer price index, the latter of which has increased enormously in the past two years in a high inflation environment.
The change will wipe last year's record 7.1 per cent indexation, along with this year's 4.7 per cent hike, acting as cost-of-living relief for young people with student debt who are trying to rent or buy a house.
Wage price index only rose 3.2 per cent last year and 4 per cent this year, resulting in about $1200 being wiped from the average debt of $26,500.
These numbers are linked to the consumer price index (CPI), which has increased enormously in the past two years in a high inflation environment.
"The fact is that universities got a lot more expensive over the last 20 years than it was when you and I went to university, and it's meant that for a lot of young people, it's got harder to pay off that debt and to get a loan to buy a house. So we want to make it a bit easier," Education Minister Jason Clare told the Today Show.
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"This is the start of it, by cutting that HECS debt last night. But if we win the next election, we've promised that we'll cut everybody's HECS debt by a further 20 per cent.
"That means for that person with the average HECS of about $27,000, we'll cut it by about another $5,500. That'll help a lot of people that are just getting started."
The Labor government has separately pledged to wipe out $16 billion of student debt and raise the income that triggers the debt to be paid back if they win the next election.
Graduates who earn over $54,000 have to start paying back their HECS debt, but earlier this month, Labor proposed raising this amount to $67,000.
In early November, Prime Minister Anthony Albanese accused his predecessor Scott Morrison of “deliberately lower[ing] the threshold” for debt repayments to begin.
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Earlier this year, the Albanese government also introduced the Commonwealth Prac Payment, a $320 weekly payment for nursing, teaching and social work students for the time they are on placement.
Simultaneously, one of the USA’s most prestigious universities, alongside several others, is wiping tuition fees for some students amid a growing movement to make education more accessible.
Earlier this week, the Massachusetts Institute of Technology (MIT) announced that any students whose families earned less than $US200,000 ($AUD307,000) annually would receive free college education from this time next year.
MIT said that 80 per cent of American households would now meet the threshold for its free tuition rule.
And for students whose families earn less than $100,000, MIT said all additional costs would be covered, like accommodation and textbooks.
Other lesser known US universities have made similar announcements in recent days.
The University of Texas System unveiled a no-tuition-fee initiative for students with families making $100,000 or less, while Carnegie Mellon University, St. John’s College and Brandeis University are introducing the same rule for anyone with families earning less than $75,000 a year.
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A four-year undergraduate course at a public US university costs around $108,000 on average, while private uni students pay around $234,000, according to US-based Education Data Initiative.
US students must take out federal or private loans if they don’t have the funds to pay for their tertiary education outright.
Federal student loans currently have interest rates ranging from 6.53 per cent to 9.08 per cent.
Private loans are much worse, with interest rates as high as 17 per cent.
Last year, US President Joe Biden announced plans to ‘forgive’ more than US$400 billion of student debt to ease pressure on lower and middle-class Americans.
However, the conservatively-geared Supreme Court overruled this debt relief program and shut it down on the basis that the president had overstepped his powers.
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