SYDNEY (Reuters) -Australia’s parliament on Thursday passed a law to cut student loans by 20%, wiping more than A$16 billion ($10.31 billion) in debt for 3 million people, and fulfilling a key election promise to help mitigate the rising cost of living.

The law is the first passed by Prime Minister Anthony Albanese’s centre-left Labor Party since being re-elected in May with one of the country’s largest-ever majorities.

“We promised cutting student debt would be the first thing we did back in parliament – and that’s exactly what we’ve done,” Albanese said in a statement.

“Getting an education shouldn’t mean a lifetime of debt.”

Education Minister Jason Clare said the measure would help “take a weight” off the backs of young people.

“Young Australians don’t always see something for them on the ballot paper, but they did this year and they voted for it in their millions,” he said at a press conference.

“And we’re repaying now the trust that these young Australians have placed in us.”

Millennials and Generation Z made up 43% of the 18 million people enrolled to vote in Australia’s May general election, outnumbering Baby Boomers.

Seizing on the generational shift, Labor made cutting student debt a key election promise, framing it as a measure to ease living costs and tackle intergenerational inequality.

The government said reducing student loans by one-fifth was equivalent to more than A$16 billion in debt relief for three million Australians.

It would mean a university graduate with an average loan of A$27,600 would have A$5,520 wiped, the government said, adding the changes would be backdated from June 1, 2025, before the loans were indexed 3.2% for inflation.

The law would also raise the minimum repayment threshold from an income of A$54,435 to A$67,000, reducing the amount low-income earners would have to pay.

($1 = 1.5516 Australian dollars)

(Reporting by Christine Chen in Sydney; Editing by Kate Mayberry)