Federal Education Minister Jason Clare said changes to student debt would lead to fewer people attending university, as millions are set to fork out more for their tertiary studies.
Student debts rose on Thursday by 7.1 per cent, with more than three million people set to pay more.
Higher education loans are indexed in line with inflation on June 1 each year, but runaway price rises have caused balances to spiral and many graduates are tipped to be worse off than when they finished their studies.
But Mr Clare brushed off calls to make higher education free for students.
"If we make a change here, what this means is that taxpayers in all of our electorates have to pay more ... that's taxpayers paying $9 billion more," he told parliament.
"It means that fewer people go to university, not more, just a lucky few, a privileged, and I want more people to go to university."
Modelling conducted by the National Tertiary Education Union found loan increases may blow out repayment periods for some university degrees to more than four decades.
Business management graduates are likely to be the worst affected, owing nearly $120,000 over a repayment period of 44 years.
A humanities and social sciences honours degree could take 40 years to repay and cost $110,353.
The union's national president Alison Barnes said many students would spend most of their working lives paying off the debt.
"This is not what higher education should look like. It's a barrier to equality which must be a core principle of our universities," she said.
"Education is a fundamental right and should not lead to decades of financial burden. We need to address this issue."
Universities Australia chief executive Catriona Jackson said she understood the concern of students, who would have to back thousands in debt.
"While the size of the debt will get bigger today, it doesn’t mean you are paying more next week out of your tax or the week after or the week after … it’s that the term of the loan gets longer," she told ABC Radio.
"When we had, in inverted commas, free degrees – they were never free. The taxpayer paid for them. A very small proportion of the population went to university."
Greens senator David Shoebridge said young people had been further disadvantaged by the indexation rise.
"Their rents are going through the roof, but their wages are stagnating, and ... hundreds of thousands of them have just been hit with an extra bill from the Albanese government," he told reporters.
The gender pay gap means female law graduates could take 36 years to pay off their qualification, four years longer than their male colleagues.
The federal government is set to profit about $2.5 billion off the back of student loan indexation this year.
Jane Body, 32, holds a bachelor of international relations and politics, a masters in business administration and a student debt of about $78,000.
If indexation continues to be tied to inflation, she's worked out she will be paying off her student loan until at least the age of 65.
"Young people are quite often left out of economic discussion and policy-making decisions (but) a lot of Australia's policies are directly or indirectly age-based," she told AAP.
"Many policies are in favour of older generations at the expense of the younger generations."
