As the government gears up for an election year, these reforms serve as a key promise to differentiate Labor's policies from those of the opposition led by Peter Dutton.

Labor MPs are advocating for these changes to address rising cost-of-living concerns among younger Australians, who may be influenced by the Greens' proposals for higher repayment thresholds and potential debt cancellation.

The repayment threshold will be indexed to remain at 75% of graduate earnings, following recommendations from the universities accord final report released earlier this year.

These reforms are based on a major expert review of universities conducted in 2024, which identified flaws in the current repayment system that discourage salary increases.

In contrast, the Greens party has proposed abolishing all student debt and guaranteeing a livable income for every student, appealing to a younger demographic.

The current landscape shows that Australians made record voluntary repayments of $2.9 billion in the last financial year, reflecting a significant increase as borrowers sought to escape high indexation.

Earlier this year, the government also announced a $3 billion cut in student debts through changes to the HELP programs, reversing a previous indexation hike.

In addition to increasing the repayment threshold, the government will cap the indexation rate for HELP loans, tying it to the lower of the Consumer Price Index (CPI) or Wage Price Index (WPI), making the system more equitable.

The new policy will implement a marginal repayment system, where higher repayment rates will only apply to income exceeding certain thresholds, similar to the income tax system.

The Albanese government is poised to announce significant reforms to the Higher Education Loan Program (HELP), which will raise the minimum repayment threshold from $54,000 to $67,000.

These changes are expected to provide an average annual benefit of approximately $680 for HELP debt holders, easing the financial burden on graduates.

Prime Minister Anthony Albanese emphasized that these reforms reflect Labor's commitment to equitable education opportunities for all Australians, regardless of their background.