An analysis by the Department of Education and Training shows the government’s proposal to reduce the student loan repayment threshold to $42 000 per annum income and index it to the CPI will reduce debt not repaid to 18 per cent of the total. The existing projected rate for debt not repaid is 23 per cent.

The officials’ projection is that this move will reduce debt not expected to be repaid under the Higher Education Loan Programme from $11.3bn to $9.1bn over 2016-17 to 2021-22.

This projected saving is on-top of the $2.8bn savings previously identified in the government’s bill.

“The HELP scheme was designed with the expectation that a small proportion of students would not be able to repay their loans but with $50 billion of outstanding debt and around a quarter not expected to be repaid at the moment, it’s clear the current situation cannot continue,” Education Minister Simon Birmingham said last night.