Australia plans to wipe out about A$3 billion ($2 billion) from student loans, cutting the debt of more than three million people, as the country continues to grapple with inflation and cost-of-living pressures.

The Albanese government announced the measure in its monthly budget on Sunday in hopes that it would ease economic pressure on workers and students, said Minister for Education Jason Clare in a statement.

The Albanese government will cut $3 billion of student debt in the upcoming Federal Budget. I was angry, aggressive and in chronic pain - until a party drug changed everything Rod Emmerson’s cartoons: Week of April 29 - May 5 Emotional debut confirmed for son of late AFL great How often should you wash your linen and towels?

The federal government will wipe out around $3 billion worth of student debt in the upcoming budget by changing the way HECS loans are indexed year-on-year.

The federal government will cap indexation on student loans as part of the May budget, wiping about $3 billion worth of debt.