Decade of debt: The number of students owing more than $50,000 revealed

The number of young Australians entering the workforce while shouldering hefty student debts has grown by 55 per cent in the past five years.

Data from the Australian Taxation Office shows the pool of people who owe $50,000 or more in student debt grew to 433,208 graduates last financial year due to the higher cost of degrees and indexation.

It comes as the government prepares to give those with a HECS debt an early Christmas present in the form of a 20 per cent debt forgiveness, delivering on an election promise. The tax office figures are from last financial year and predate the upcoming debt reduction.

The tax office data also shows the average time it takes for someone to clear their university debt has tipped over 10 years for the first time in 2024-25.

Demographer Simon Kuestenmacher said those with a university degree earned more in their working lives, but the financial consequences of high student debt went beyond the decade it took them to repay it.

“We’re sending more than half of year 12 students next year to university. It means a degree is increasingly less special.”

Kuestenmacher said a degree could be worth the cost if it resulted in a well-paying job, but for those who pursued a career with a lower average income, such as nurses and social workers, the financial impacts would last longer.

Repaying debt inhibited graduates from saving for a house, he said, citing a hypothetical example of someone who earned about $100,000 who would repay 6 or 7 per cent of their income until they cleared their debt.

“You have less money available to save for a down payment. And that, of course, is problematic.”

The government has expanded its 5 per cent home guarantee, which Kuestenmacher said ultimately increased how much someone borrowed to buy a home, meaning in the long term, they paid more in interest to a bank.

Under the current student loan repayment threshold, graduates start paying the government back once their income tips over $67,000. Last year, biology, music, accounting and journalism graduates all reported median salaries lower than $70,000.

Former RBA economist Ashley Craig, who is now a senior economics lecturer at Australian National University, said high-income earners would benefit most from the government’s debt forgiveness.

“One of the most important aspects of the ‘debt forgiveness’ policy is that it has no financial benefit at all to people who never earn more than the average level of income (and well above the median level),” he said.

“That is because they will never repay any of their HECS balance, regardless of whether that forgiveness is granted or not. Even within those people who do benefit because they do have high incomes at some point, this disproportionately benefits those who would have paid it off sooner rather than later, which is to say those who have even higher incomes.”

University leaders welcomed the debt reduction earlier this year but said the government has failed to address the underlying problem of high degree costs.

The government says it will take advice on fees from the newly formed Australian Tertiary Education Commission, which will be fully operational by January.

Under the Morrison government’s job-ready graduates scheme, the cost of an arts degree hit $50,000, while some degrees of national importance, such as science and teaching, became cheaper to study. A Melbourne University study in 2023 found in the years since it was introduced, only 1.5 per cent of applicants changed their field of study.

University of NSW physiotherapy student Isabelle Pannell, 18, was aware of the $62,000 sticker price of her degree because it was clearly stated. She thinks degrees in healthcare should be cheaper but the high price did not faze her.

“I know it’s a big amount, I just know that I’ll have to pay it back later,” she said.

She said the median salary for a physiotherapist is about $85,000, which felt like a mismatch with the price of study.

“It’s not as much as I think you would hope it to be because it’s a healthcare and the degree costs so much,” she said.

Jennica Wang, 18, will pay about $30,000 for a computer science degree.

For Aditi Kelvekar, 19, the high $87,000 estimated cost of her five-year combined law and commerce degree did not turn her off studying, and she thought it was a good investment in the future.

“To me, it just didn’t really matter what the final price was going to be because this is something that I want to do.”

Education Minister Jason Clare said the 20 per cent cut would help ease the pressure on young Australians as they look to buy homes or start families.

“Getting a university degree opens up more opportunities and graduates earn higher incomes, which is why we want more Australians getting a crack at uni,” he said.

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