Education Minister Jason Clare will on Thursday introduce the bill capping the Higher Education Loan Program (HELP) indexation rate to the House of Representatives.

If passed, about $3 billion worth of student debt would be eliminated with recipients enjoying an average deduction to their outstanding loans of $1200.

The capped rate would ensure indexation matched either the Consumer Price Index (CPI) or Wage Price Index (WPI) – whichever was lower – after Australians were slugged with a student debt increase of 7.1 per cent in 2023 due to runaway inflation.

“That hit a lot of Australian students and a lot of Australians with student debt really hard,” Mr Clare told reporters.

“They felt it, they thought it was unfair, and so did we. But we’ve responded.”

The bill will also implement a number of other recommendations of the Universities Accord review, including funding for fee-free university courses and paid placements for students in areas such as teaching, nursing, midwifery and social work.

“It’s been made clear to me by a lot of students that when you do your prac it can often be very, very hard to pay the bills, to do your part-time job,” Mr Clare said.

“Sometimes it means that you have to move out of home to another place to do that prac. It means that a number of students either have to delay their degree or never finish it at all.”

Labor needs the support of the opposition or the crossbench to secure the bill’s passage through the upper house, but Mr Clare is optimistic it will get through.

“There have been a number of members of the crossbench that have campaigned for this reform, amongst them Monique Ryan, and I’m confident that we’ll have their support for this legislation,” he said.