The federal government should collect unpaid debts from students after they die, a report by an influential think-tank has found.

The Grattan Institute study showed that the government could collect about $800 million a year by 2017 if it recovered student debts from deceased estates and Australians living overseas.

The report considered a range of options for recovering “doubtful debt” – government money loaned to university students that is unlikely to be repaid.

“The amount exceeds a billion dollars a year, and is expected to grow significantly in coming years,” it said.

The report cites predictions that $7.1 billion of the $30.1 billion outstanding Higher Education Loan Program debt at 30 June 2013 will not be repaid.