Three million Australian university students will have their debt cut under measures revealed in the federal budget.

Treasurer Jim Chalmers confirmed a $3b reduction in Help Education Loan Program (HELP) and other student debt in his budget speech last night.   

The change will impact university graduates, and those with VET Student and/or Australian Apprenticeship Support loans. 

UOW medical health science student Antonia Sharrock said the announcement will have a positive impact on students’ lives. 

“I think the federal budget announcement is really positive because I think that a lot of people are really struggling to be able to pay off their HECS debt,” she said. 

“ And it makes studying quite difficult and challenging for people … its really awesome that we’re now gonna be able to have that money stress put to side a little bit.” 

The indexation rate will reduce from 7.1 per cent to 3.2 per cent in 2023 and from 4.7 per cent to around 4 per cent in 2024. 

This decision was made in response to recommendations from the Australian Universities Accord delivered in 2023. 

Also announced and after pressure from unions, a weekly payment will be introduced for students who undertake mandatory work placement as part of their studies. The means-tested payment will be available to those studying nursing, teaching and social work.

Business and law professor Martin O’Brien said the cost of undertaking a degree will become more manageable and reasonable once the payment is in place. 

Human capital theory revolves around earning higher pay after education that at least covers the explicit and implicit costs in the years that education is being undertaken,” Prof. O’Brien said.  

“From an economic and social point of view, young generations are having a tough time with other cost of living expenses, high rent, relatively low pay, difficulty saving a deposit,” 

Ms Sharrock said the move would help students focus on their studies and remain in higher education. 

“It’s really good that people are gonna be able to be paid … it means that they get people who are gonna be more educated or can focus more on their education,” she said. 

UOW teaching student Rose Haining also welcomed the payment announcement.

“I’m really excited to be able be paid while going on placement because I have friends … doing months of placement and they have to work in the nights or the weekends,” Ms Haining said. 

AUDIO: Teaching student Rose Haining discusses how students struggle with unpaid work placements. 

The placement payments will begin in mid-2025.

The University of Wollongong has announced its support regarding the changes to indexation and student placement payments.