Labor has promised fast action to cut student debt, but arts students will have to wait for lower fees

Labor’s federal election win means university fees and costs are set to change. But some of these changes will not be immediate.

Prime Minister Anthony Albanese has already said planned cuts to student debt will be a top priority for the new parliament^[1]. A new student debt repayment system^[2] will follow soon after.

But humanities students paying nearly A$17,000 a year for their studies – thanks to the Job-ready Graduates scheme^[3] introduced by the Morrison government – will probably have to wait until 2027 for lower fees.

Reduction in student debt

People with student debt will benefit from a 20% cut to how much they owe^[4]. As the Greens support wiping student debt entirely, Labor is likely to only need one or two other senators to pass the cut.

With more Labor senators^[5] elected, Labor will be less reliant on crossbenchers to get legislation through parliament.

Labor says the debt reduction will apply before 3.2% indexation^[6] is applied to HELP loan balances on June 1 this year. Given this deadline is mere weeks away, the necessary legislation will probably need to be retrospective.

On average, the 20% reduction will save Australia’s 3 million student debtors about $5,500 each.

A new student debt repayment system

Another promised Labor change will deliver quick cash benefits to the about 1.2 million people making compulsory student debt repayments.

If the Senate agrees, for the 2025-26 financial year, the income threshold to start repaying student loans will increase from $56,156^[7] to $67,000^[8]. Anyone earning less than $67,000 in 2025-26 will repay nothing that financial year, compared to between $561 and $1,340 under current settings.

Once the $67,000 income threshold is reached, student debtors will repay 15% of their income above this amount up to an income of $125,000, when the rate moves up to 17%. For example, a person earning $68,000 will be $1,000 above the new threshold – 15% of $1,000 equals a repayment of $150. Under the current system, somebody earning $68,000 would repay $1,360.

Employers will deduct lower HELP repayments from their payroll, delivering extra cash to student debtor employees. Given the limited time before the thresholds are scheduled to change on July 1, employers may start with the old repayment system and transition to the new one after the necessary legislation passes.

Understand the fine print

During the election campaign, the Parliamentary Budget Office released work^[9] it did on HELP repayment scenarios for independent ACT Senator David Pocock, who was re-elected on Saturday.

This showed how under Labor’s proposed system, people with student debt will take longer to repay and incur higher indexation costs. If student debtors are concerned about this they can make voluntary repayments.

What happens to the Job-ready Graduates scheme?

A key to reducing repayment times is students accruing less debt in the first place. The Morrison government’s Job-ready Graduates policy increased student contributions for business, law and most arts subjects. Currently they pay $16,992 a year^[10] for their studies.

The Coalition introduced this change in 2022 in a bid to encourage more university students to study “job-ready” teaching, nursing and STEM subjects.

A new Australian Tertiary Education Commission, which Labor plans to legislate in the second half of 2025, will review student contribution levels^[11] as part of its broader role^[12] in managing the domestic student funding system.

Last year, the Australian Universities Accord final report^[13] recommended student contributions should no longer be designed to steer course choices. Instead they should be based on expected future earnings.

Using this principle, humanities students would pay the cheapest student contribution level. But this will not happen quickly.

The new commission has a lot of work to do, with new student contributions forming part of a broader funding overhaul. The government then needs to accept any recommendations and legislate the new rates.

Unfortunately for current students, this process means that student contributions are unlikely to change before 2027 at the earliest.

International students

While many domestic students are set to eventually pay less for their education, international students face early increases in costs. During the election campaign, Labor announced student visa application fees will increase from $1,600 to $2,000^[14]. As recently as June 2024 the visa application fee was only $710^[15].

This latest visa increase adds another item to an already long list of policies^[16] designed to discourage or block potential international students. It probably isn’t the last.

Although student visa applications have trended down^[17], the number of student visa holders in Australia^[18] at the end of March 2025 was higher than at the same time in 2023 or 2024.

The government might try again to legislate formal caps on international student numbers^[19]. The Greens combined with the Liberals to block this in 2024.

Commonwealth Prac Payments

With Labor returned, eligible teaching, nursing and social work students will receive $331.65 a week^[20] when on mandatory work placements.

While the “Commonwealth Prac Payments” policy is scheduled to start on July 1, the necessary legal instrument is not yet in place.

Late in the election campaign the Coalition announced that, if elected, it would proceed with Prac Payments as a loan, rather than a grant^[21].

With the election result, Prac Payments can go ahead as originally planned. The minister can authorise the necessary delegated legislation before parliament sits. While the Senate could later “disallow”^[22] Prac Payments, the new Senate numbers make this very unlikely.

Needs-based funding

Labor’s election win should see another so far unlegislated program – needs-based funding for equity students^[23] – proceed as promised from January 1 2026.

This will be a per student payment made to universities for each low socioeconomic status and First Nations student, along with each student enrolled at a regional campus. The idea is similar to needs-based funding for schools^[24].

Whether or not current education minister Jason Clare remains in the portfolio, Labor has a large higher education agenda to implement. In some areas the detail is already clear. But significant work remains to develop the new Australian Tertiary Education Commission and a new domestic student funding system.

With several policy start dates due in the next eight weeks, the government will need to move quickly.

References

1. ^{^} a top priority for the new parliament (www.pm.gov.au)
2. ^{^} student debt repayment system (ministers.education.gov.au)
3. ^{^} Job-ready Graduates scheme (theconversation.com)
4. ^{^} 20% cut to how much they owe (www.education.gov.au)
5. ^{^} more Labor senators (theconversation.com)
6. ^{^} 3.2% indexation (www.legislation.gov.au)
7. ^{^} $56,156 (www.legislation.gov.au)
8. ^{^} $67,000 (www.education.gov.au)
9. ^{^} released work (www.pbo.gov.au)
10. ^{^} $16,992 a year (www.studyassist.gov.au)
11. ^{^} review student contribution levels (www.sbs.com.au)
12. ^{^} part of its broader role (www.education.gov.au)
13. ^{^} final report (www.education.gov.au)
14. ^{^} from $1,600 to $2,000 (www.sbs.com.au)
15. ^{^} visa application fee was only $710 (minister.homeaffairs.gov.au)
16. ^{^} already long list of policies (theconversation.com)
17. ^{^} student visa applications have trended down (data.gov.au)
18. ^{^} student visa holders in Australia (data.gov.au)
19. ^{^} legislate formal caps on international student numbers (theconversation.com)
20. ^{^} receive $331.65 a week (www.education.gov.au)
21. ^{^} as a loan, rather than a grant (www.theaustralian.com.au)
22. ^{^} Senate could later “disallow” (peo.gov.au)
23. ^{^} needs-based funding for equity students (www.education.gov.au)
24. ^{^} needs-based funding for schools (www.education.gov.au)