Australia’s parliament passed legislation on Thursday to cut student loan balances by 20%, providing more than AU$16 billion ($10.31 billion) in debt relief for three million Australians, as part of the government’s efforts to ease cost-of-living pressures.

The law, the first passed since Prime Minister Anthony Albanese’s center-left Labor Party was re-elected in May with a sweeping majority, fulfills a key campaign pledge aimed at addressing rising financial burdens on younger generations.

“We promised cutting student debt would be the first thing we did back in parliament – and that’s exactly what we've done,” Albanese said in a statement. “Getting an education shouldn't mean a lifetime of debt.”

Education Minister Jason Clare said the measure would help relieve financial stress for young Australians.

“Young Australians don't always see something for them on the ballot paper, but they did this year and they voted for it in their millions,” Clare told reporters. “And we're repaying now the trust that these young Australians have placed in us.”

Millennials and Generation Z made up 43% of the 18 million registered voters in May’s general election, surpassing the number of Baby Boomers. 

Labor framed the debt cut as a move to address intergenerational inequality and alleviate living costs.

Under the new law, a university graduate with an average student loan of AU$27,600 would have AU$5,520 wiped from their debt.

The changes will be backdated to 1 June, 2025, before a 3.2% indexation for inflation takes effect.

The legislation will also raise the minimum income threshold for loan repayments from AU$54,435 ($35,100) to AU$67,000 ($ 43,200), reducing payment burdens for low-income earners.

Different countries have various approaches to student loans. 

As of the end of 2024, the average total student loan debt in the U.S. stood at approximately $38,375 per borrower, based on federal student aid data, just below the federal average of $39,075 noted in early 2025, according to BestColleges. 

In England and Wales, student loans are automatically written off after a set period (typically 25 or 30 years, depending on the loan plan). Graduates repaying under income-contingent repayment schemes pay only when their earnings exceed set thresholds, with interest applied differently under each plan. Students in England now graduate with an average debt of £53,000 ($68,3700). 

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