The government has indicated it will take 20 per cent off students debts, which would apply to $16 billion worth of loans, if Labor wins the next election.
It means students with the average HECS debt of $27,600 would have more than $5500 taken off their loans, helping an estimated three million people.
Education Minister Jason Clare said the changes would provide much-needed support to students.
"A lot of young Australians are doing it tough at the moment. They're just starting out, they've just finished their uni degree ... this will cut the cost of that bill," he told Sky News on Sunday.
"It will make a massive difference for a lot of young Australians right across the country, not just young Australians, though, everybody that has a student debt."
Hear it here first: a re-elected Labor Government will wipe 20% off your student debt. — Anthony Albanese (@AlboMP) pic.twitter.com/EpWUgxTJKENovember 2, 2024
The reform is set to be part of Labor's push for a second term in government, with a federal election looming in 2025.
Mr Clare flagged the cuts to student debt would be the first piece of legislation brought to parliament under a re-elected Labor government.
Prime Minister Anthony Albanese will spruik the HECS changes at a speech in Adelaide on Sunday.
"This will help everyone with a student debt right now, whilst we work hard to deliver a better deal for every student in the years ahead," he said.
"Our whole nation benefits when we make it easier for people to access education. This is about opening the doors of opportunity – and widening them."
Mr Clare defended the decision not to implement the student debt cuts before the next election, saying work was already ongoing for university reform.
Greens Senator Mehreen Faruqi wants the government to bring forward student debt relief measures. (Bianca De Marchi/AAP PHOTOS)
It comes as the government moved to lower the indexation levels for HECS, as well as provide payment for students doing practical work in certain professions as part of their degree.
"For a lot of young people, they're straight out of uni, they're on a low income, they're paying the rent, paying the bills, trying to save for a mortgage, trying to start a family, and they already have to start paying off their HECS bill," he said.
"It's just a simple fact that a lot of young people are doing it tough, doing it tougher than many other Australians."
But opposition foreign spokesman Simon Birmingham rubbished the HECS proposal, questioning where the money will come from to pay for it.
"This isn't real reform. This doesn't change the student fees that somebody who starts uni next year pays," he told Sky News.
"This is simply a cash splash from Anthony Albanese, an attempt at trying to con or hoodwink an electorate ahead of an election from a government who has ultimately overseen the inflationary environment that has put so much pressure on young Australians."
Greens higher education spokeswoman Mehreen Faruqi said student debt holders would have already benefited under a bill proposed by her party to scrap indexation and increase repayment thresholds.
She called for the government's proposed change to come before parliament sooner.
"After years of blocking us, Labor is finally starting to listen to the Greens about the need to address soaring student debt, but it's a small step well below what is needed," she said on Saturday.
