A Government Plan to Fix Student Loans Made Things Worse

An Australian government program called the Job-ready Graduates scheme was supposed to help students choose careers the country needed most. Instead, it raised the cost of arts and business degrees by a large amount and left many graduates with debts they may never fully pay off. The number of Australians who owe more than $50,000 in student debt has grown by 55 percent in just five years. Experts and lawmakers are now calling for urgent changes to fix the damage the policy caused.

The Job-ready Graduates scheme was created under former Prime Minister Scott Morrison. It was designed to push students toward subjects like science, technology, engineering, and math — also known as STEM. The idea was that Australia needed more workers in those fields, so the government made arts and business degrees more expensive to nudge students away from them. But the plan did not work — students kept enrolling in arts and business courses anyway, and they were simply left with much bigger bills.

Today, studying law, accounting, business, or similar subjects at an Australian university costs $18,025 per year. A student who completes a three-year degree in one of those subjects will owe $54,075 by the time they graduate. Students who complete a double degree — studying two subjects at once — could graduate owing $90,125. These are very large amounts of money for young people just starting their lives.

Australia has a system called HECS, which stands for Higher Education Contribution Scheme. It lets eligible students borrow money from the government to pay for university. Students do not pay the loan back right away — instead, they repay it slowly through the tax system once they start earning enough money. The loan does not charge interest, but it does go up each year in line with inflation, which means the amount owed can grow over time.

The current Albanese government made some changes to HECS to make it fairer. It changed the rules so that debts grow at whichever rate is lower — either the consumer price index or the wage price index. It also cut existing student debts by 20 percent after the last election. However, critics say these steps are not enough, because the government has still not scrapped the Job-ready Graduates scheme that caused the problem in the first place.

Higher education expert Andrew Norton has warned that arts graduates face a tough road ahead. He says they are dealing with rising debt at the same time that artificial intelligence, or AI, is reducing the number of jobs available to them. With fewer job options and lower wages in some fields, many graduates may struggle to pay back what they owe. Norton fears that some people could be in debt for their entire working lives.

Politicians from several parties have tried to force the government to act. The Greens put forward a bill to undo the Job-ready Graduates scheme, but it failed last month. Independent MP Monique Ryan then introduced her own bill, called the Higher Education Support Amendment (Fix HECS) Bill 2026. Her bill would move the date when HECS debts are adjusted from June 1 to November 1, which she says would save graduates a total of $3.2 billion over ten years.

Ryan described the current system as a 'stealth tax on graduates,' meaning students are being charged more without fully realizing it. Private members' bills — bills introduced by individual MPs rather than the government — rarely pass into law. But the repeated attempts to change the system show that many people, including some members of the government's own party and union groups, are unhappy with how things stand. Education Minister Jason Clare has so far not repealed the scheme and has handed the issue to a new advisory group that will not report until mid-2027.

Many students and young Australians feel let down. They paid high prices for university degrees that may be worth less in a world where AI can do many tasks that graduates once trained for. The Albanese government often talks about fairness between generations, but critics say it has not done enough to protect young people from debt. For now, hundreds of thousands of graduates carry the weight of large loans — a lasting reminder of a policy that missed its mark.