University students could get cost of living relief in the federal budget, with the education minister considering changes to HECS repayments and unpaid placements.

The biggest review of universities in decades has recommended sweeping changes to better financially support students and get more people from low-income backgrounds into uni.

Federal Education Minister Jason Clare has indicated he's open to changing the way HECS repayments are calculated as soon as the May budget, putting more money in the pockets of graduates on lower incomes.

The government is yet to respond to the accord, and will spend months considering its wideranging recommendations.

How HECS works

For most local undergraduate and coursework postgraduates (ie, not PhD students) the costs of university education are shared between the student and the federal government.

The idea underpinning the scheme is that having university-educated citizens not only has benefits for the students themselves but also for the Australian community more widely.

HECS allows students to defer paying their portion of the cost until they earn a certain salary, currently $51,550 a year.

Nine in 10 undergraduate university students complete their degree with a HECS debt and the more they earn, the more they pay off their debt.

But the recent Australian Universities Accord review found while the system was world-leading, it could be working much better.

What's been recommended

Basing student payments on projected lifetime earnings

• Changing repayment rates to reduce disincentives to work
• Changing the timing of indexation for loans to reduce the impact of inflation
• Ensuring indexation doesn't go higher than wage growth
• Making more government-sponsored spots available in postgraduate study in areas of skills shortage

Changes to HECS payments

The accord made a number of recommendations to take financial pressure off students, including changes to HECS.

Among the suggestions are changing indexation timing to lessen the impact inflation has on debts and making sure debts don't grow faster than wages.

"We will respond in the next couple of months," Mr Clare told the ABC.

"It's a big report, right?

"Responding to it is bigger than one budget, it's a long-term plan, but we need to start now.

"And so what I'm doing right now with my colleagues and working with universities and talking to students is working out what are the things that we need to do first."

The review also recommended the establishment of a new sector watchdog to be called the Australian Tertiary Education Commission.

It would fold in the existing regulator, called the Tertiary Education Quality and Standards Agency, as well as the Australian Research Council.

Mr Clare has indicated support for a new commission.

The opposition's education spokesperson, Sarah Henderson, said the Coalition backed changes to HECS.

"We would welcome anything that makes it more affordable for students to go to university," she said.

But she called on the government to act faster

"We've seen so little action on escalating student debt."

"Last year alone, debts were up by 7.1 per cent."

Nurses and teachers could be paid for placements

Not only are students facing runaway cost of living pressures and growing HECS debts, many are also required to do unpaid work to get their qualifications.

It's putting enormous pressure particularly on those who aren't from wealthy backgrounds, and the accord wants them to be paid for their work.

"That's the sort of thing that could help with the cost of living as well," Mr Clare said.

"They spend a lot of time not actually on campus, but in the classroom or in a hospital where they're not paid for the work that they're doing. Sometimes they have to give up the paid part-time job in order to do that."

Under the recommendation from the accord, the federal government would pay for placements in areas of skills shortages such as nursing and teaching, while the public and private sectors would pay for placements in other fields.

'Job-ready Graduates' could be headed for the scrapheap

The accord panel branded the former Coalition government's Job-ready Graduates scheme a failure.

The scheme was designed to funnel students into studying for qualifications in areas of skills shortage such as nursing, teaching, psychology and maths by lowering the cost of those courses.

But it also raised the cost of degrees in law, accounting, economics, communications and arts, with students in those study areas incurring disproportionately large debts relative to their potential future earnings.

But the minister would not be drawn on whether students affected by the scheme would see some money back in their pockets.

He said a new funding model could be considered by the recommended education commission.

"It strikes me that this is the sort of thing that they would need to look at as part of a suite of recommendations that are in this report about a new funding model," he said.

Students are calling for the government to dump the policy immediately.

National Union of Students president Ngaire Bogemann was one of those whose degree increased in cost thanks to Job-ready Graduates.

"[I'm in] an interesting position where half of my degree is more expensive than the other because the government, under Job-ready Graduates, values one half of my degree more than it does the other," said Ms Bogemann who is studying politics, international studies and French studies.

"Changes that will make the cost of subjects fairer will only be a benefit for students, but ultimately only free education will build the equitable tertiary education system that students are crying out for."

Educators and other workers in the sector are urging the federal government to follow through on the recommendation, their union said.

"It had terrible implications for the sector and didn't work as it was intended," National Tertiary Education Union president Alison Barnes said.

"We are hoping it will go and we want to ensure our universities are funded adequately."