Economists have criticised Labor's proposed 20% reduction to HECS debts, arguing a flat $5,500 cut would be fairer and more effective. The legislation, to be introduced this week, fulfils a key election promise and will reduce outstanding student debt for about 3 million Australians by a fifth, providing $16 billion in total relief.
Analysis by the e61 Institute found that half of the benefits from a similar 20% cut in 2012 went to the top third of income earners a decade later. Medicine, law and dentistry graduates gained an average of $10,000, while teaching and nursing graduates received only $3,000 to $4,000. Timing also favoured recent graduates, with those finishing a year before the cut receiving twice as much relief as 2007 graduates.
Monash University professor Andrew Norton described the policy as a 'windfall' for current loan holders, treating symptoms rather than causes. He noted it delivers nothing to future or past graduates and questioned whether funds could be better spent addressing student contribution issues. The Job-ready Graduates Scheme, introduced in 2021, has been criticised for raising fees in humanities without significantly changing enrolment decisions.
