UPDATE - from The Australian

Economist Chris Richardson has branded Labor’s move to slash student debts by 20 per cent as “dumb”, warning that the $16bn price-tag for the plan “does nothing for the nation’s future”. 

Under the plan unveiled by Anthony Albanese on Sunday, more than three million Australians with student debts – including those with HELP accounts, VET student loans, Australian apprenticeship support loans and other income-contingent loans – will see their liabilities reduced by 20 per cent by 1 June 2024. 

But even as graduates have experienced ballooning student debts in recent years due to the recent bout of high inflation, Mr Richardson said the change was a “fairness fail” as those who obtained a post-secondary education were likely to earn much more than those who didn’t.

“Handing $16bn to graduates is a reverse Robin Hood – it’s a tax cut targeted to the big end of town, with money going from the less well off to the better off,” he said. 

“There are many things that Australia could spend $16bn on. This wouldn’t feature on any list that someone fighting for a fairer and more prosperous Australia would put together.”

Student loans are recorded as ‘financial assets’ in the budget papers. Accordingly, the amount repaid does not affect the underlying cash balance, forecast to be $28.3bn this financial year. However, they do add to net debt which is projected to reach $552.5bn.

The move, which is the third in a series of announcements made by Labor to lessen student debts, is likely to prove popular among young voters who have been enticed by the Greens via a series of populist measures, purportedly intended to bolster housing affordability.