The Turnbull government is closely examining ways to get more graduates to pay back their higher education debts, as a new report finds reducing repayment thresholds for HECS and other student loans would rake in half a billion dollars a year.

The report, by the respected Grattan Institute, has been welcomed by Education Minister Simon Birmingham, who has repeatedly said the government needs to rein in the spiralling costs of higher education.

The government is considering changing repayment thresholds, as well as increased fees and cuts to university funding, as it looks for savings in the May budget.

Student debt is expected to balloon to $63 billion by 2019, up from $30 billion last year, with a fifth of all loans not expected to be repaid.