Treasurer Scott Morrison is being urged to introduce a plan to allow graduates to use their retirement savings to pay off government loans to cover course fees.

Liberal senator Chris Back says the plan would target graduates in their twenties and thirties who have Higher Education Loan Program (HELP) debts owing to the government, easing cost of living pressures on young families.

The plan could also deliver significant budget savings.

"At a time when they really do have a high liability, perhaps a young family [or] a mortgage, they've got this HELP debt sitting over them," he told AM.

The plan would allow younger workers to retire their HELP debts using superannuation savings, then require them to make catch up super payments later in their career to ensure they were no worse off in retirement.

The ABC understands modelling from the Parliamentary Budget Office shows the idea would save in excess of $500 million over the forward estimates if included in this year's budget.

The popular HELP scheme has seen significant growth in recent years.

Last year the HELP scheme cost the Government around $2.4 billion.

Next year that number is expected to grow to around $3 billion.

In total, there is around $30 billion in outstanding HELP loans to Australians.

While a backbench committee has given the plan a tick, it has not come before the Government's expenditure review committee, which is charged with enacting budget cuts.

"I am very hopeful it will find its way into this year's budget," Senator Back said.

"If not, I am very very hopeful it will find its way into our policies going forward into 2016 election."

Editor’s note January 21, 2016: An earlier version stated that the $30 million to students in HELP loans was the amount granted last year, when in fact it is the total outstanding HELP debt.