Thousands of student teachers, nurses and social workers will be paid hundreds of dollars each week during mandatory work placements, in an Australian first.
As part of their degrees, these students must work hundreds of hours of placement, forcing many to give up part-time jobs for unpaid labour.
But from July 2025, about 68,000 at university and 5000 in vocational education and training will be eligible for a $319.50 weekly payment in addition to income support they may already receive.
The May 14 federal budget initiative comes a day after the Commonwealth revealed it would wipe about $3 billion off student debt in an effort to appeal to young voters.
Education Minister Jason Clare says the paid training placements will ease workforce shortages in the care and education sectors.
"It's intended to make sure a lot of people who struggle to pay the bills while doing (practical work) as part of their degree, finish their degree," he told ABC radio on Monday.
But the allocated money was not intended to be a wage and would be means-tested, Mr Clare emphasised.
"It's designed to be a little bit of extra financial support," he said.
"There will be a lot of people who will still be able to work at the same time as they're doing this."
Prime Minister Anthony Albanese says the assistance on student pay and debt will help expand access to education and ensure no-one is left behind.
"We're proud to be backing the hard work and aspiration of Australians looking to better themselves by studying at university," he said.
Universities Australia executive Luke Sheehy says the payments will prevent students having to choose between study and paying bills.
"These students can't graduate without practical experience but too many are being held back by placement poverty which can be the difference between commencing and completing a degree," he said.
While the Australian Services Union and the Australian Nursing and Midwifery Federation welcomed paid placements for their future workforces, the Australian Education Union urged the government to do more.
AEU federal president Correna Haythorpe says changes are needed to help those already embarked on careers.
Greens Senator Mehreen Faruqi said the government plan "lacks ambition" and its reliance on means testing could hurt students.
"Students should be paid at least the minimum wage for their work on placement, not a lesser supplementary amount," she said.
Asked if it was a good decision for students, Opposition Leader Peter Dutton claimed the government was fuelling inflation.
"Every decision they make is inflationary," he said.
"If you ask why inflation is higher here than it is in other parts of the world, it's because of decisions the government's made in the last two budgets."
The Australian Medical Students' Association and Pharmacy Guild of Australia have called on the government to include their students in the payment plan.
Mr Clare said a potential expansion to other courses was something the government would look at "down the line".
The government on Monday also announced it would spend $50.2 million on scholarships for nurses and midwives, allowing them to upskill.
