In contrast to the U.S., where student debt has become a major financial burden, Australia’s system is designed to ensure education remains accessible to all, regardless of financial background.

In the United States, the average student loan debt is approximately USD $37,693, including both public and private loans. Graduates often face repayment periods of up to 20 years, with many struggling to cover the full cost of their education due to gaps in loan coverage. 

By comparison, higher education in Australia is more affordable. Domestic students pay between AUD $20,000 and $45,000 for a bachelor’s degree, depending on the course. For students enrolled in higher-value degrees, such as medicine, costs can be significantly higher. 

However, these fees are often covered by the government’s HECS-HELP loan program, which allows eligible students to borrow money to cover their tuition. The loan limits are set at AUD $121,844 for most degrees and up to AUD $174,998 for specialized fields like medicine. 

As of recent figures, the average student debt in Australia is around AUD $27,000, with repayment taking an average of just over eight years. Nearly 3 million Australians currently carry student loan debt, contributing to a national student debt total of over AUD $81 billion. Notably, over 7 million people have loans exceeding AUD $100,000, reflecting the rising cost of some specialised degrees.

Under the HECS-HELP system, repayments are income-contingent. Students do not begin repaying their loans until they earn above a certain threshold. Currently, the repayment threshold is set at AUD $54,435, with a repayment rate that scales from 0% for lower incomes to a maximum of 10% when income exceeds AUD $159,664. This graduated repayment system ensures that individuals are not burdened with repayments they cannot afford and aligns repayment with their earning capacity.

The Australian government has announced several changes to the HECS-HELP system to reduce the financial strain on graduates and make student debt more manageable. One key change involves adjusting the indexation rate used to calculate annual increases in loan balances. 

Currently tied to the Consumer Price Index (CPI), the indexation rate will shift to the lower of CPI or the Wage Price Index (WPI), which will likely result in lower increases in loan balances. This change, which is expected to be backdated to June 1, 2023, would reverse the 7.1% spike in loan amounts that occurred in 2023.

Another significant reform is the increase in the minimum repayment threshold, which will rise to AUD $67,000 in 2025-26. This means graduates will not have to start repaying their loans until they earn above this new threshold. 

Furthermore, repayments will be based on income above the threshold rather than total income, which will benefit lower earners. Additionally, the government plans a 20% reduction in all outstanding student loans taken out before June 1, 2025, which could reduce the national student debt by approximately AUD $16 billion.

While these reforms are not yet law and are subject to parliamentary approval, they represent a significant shift towards making higher education more financially accessible for all Australians, further distinguishing the Australian system from the U.S. model.