Millions of Australians closer to having $3 billion of student debt wiped

Three million Australians are a step closer to seeing their student loans slashed after Labor's debt relief bill passed through the House of Representatives.

The legislation will cap the HECS-HELP indexation rate to whichever is lower out of the consumer price index (CPI) or wage price index (WPI) after last year's shock indexation spike of 7.1 per cent.

If the bill passes through the Senate, the ATO will apply an automatic credit for the difference between the current indexation rate and new indexation rate, backdated to June 1 last year.

READ MORE: Israeli defence minister warns attack on Iran would be 'lethal' and 'surprising'

Education Minister Jason Clare said a graduate with an average debt of $26,500 would have about $1200 wiped from their outstanding loan under the new policy.

Those who repaid their HELP debt after indexation was applied last year and this year will receive their credit via a refund to their bank account.

"We are one step closer to wiping out around $3 billion in student debt from more than three million Australians," Clare said in a statement.

READ MORE: US election poll-tracker: Who will win on November 5?

"We are doing this, and going further. We are backdating this reform to last year. This will wipe out what happened last year and make sure it never happens again."

The Universities Accord Bill will also introduce prac support payments for 68,000 teaching, nursing, midwifery and social work students from July next year.

It will also expand FEE-FREE University Ready Courses, which act as a bridge between school and university.

FOLLOW US ON WHATSAPP HERE: Stay across all the latest in breaking news, celebrity and sport via our WhatsApp channel. No comments, no algorithm and nobody can see your private details.