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Students experiencing 'poverty placement' caused by mandatory, unpaid practical placements required for their university degrees will be eligible for a new commonwealth payment to be unveiled in the upcoming budget.
University students studying teaching must do 16 weeks of unpaid practical experience, nurses 20 weeks and social workers 26 weeks.
Earlier this year, students told ABC News they were forced to choose between food and going to the doctor in order to meet their course requirements and graduate.
Prime Minister Anthony Albanese says these students will now be eligible for a new Commonwealth Prac Payment of $319.50 a week.
"Teachers give our children the best start in life, they deserve a fair start to their career," said Mr Albanese.
"We're proud to be backing the hard work and aspiration of Australians looking to better themselves by studying at university."
Yesterday, the government announced changes to student loan indexation that wiped out $3 billion in HECS payments.
The prime minister said the measures would provide cost of living relief to students.
"We're funding support for placements so our future nurses, teachers and social workers can gain the experience they need," said Mr Albanese.
"We're making HECS fairer so no-one is held back by student debt. And we're expanding access to university in our regions and suburbs to make sure no Australian is left behind."
The government's move was recommended in a recent wide-ranging review of higher education called the Australian Universities Accord.
The accord panels expert report said giving students financial support for placements was essential, to ensure that enough students could meet their placement requirements "without falling into poverty".
"This will give people who have signed up to do some of the most important jobs in this country a bit of extra help to get the qualifications they need," said Education Minister Jason Clare.
"Placement poverty is a real thing. I have met students who told me they can afford to go to uni, but they can't afford to do the prac."
The government hasn't revealed how much the program will cost and didn't expect to have an estimate until budget night.
It has calculated 68,000 higher education students and 5,000 VET students would be eligible for the payment.
The amount of $319.50 a week is benchmarked to the single Austudy weekly rate.
It will be means tested and available from July 1, 2025.
Mr Clare said the government had listened to concerns raised by students after record HECS indexation last year and rising cost of living pressures.
"Some students say prac means they have to give up their part-time job, and that they don't have the money to pay the bills," Mr Clare said.
"This is practical support for practical training."
The minister for skills and training, Brendan O'Connor, said the new payment would help with a shortage of health workers.
"This prac payment is in addition to the government's investment in Fee-Free TAFE, which is supporting thousands to gain Division 2 nursing qualifications and helping to address skills shortages in aged and health care," Mr O'Connor said.
"This is an additional payment to support nursing TAFE students who have extra costs such as uniforms, travel, temporary accommodation, or childcare, during mandatory clinical placements."
As well as the university accord, the government said the new payment formed part of its response to its gender equality strategy Working for Women.
It also said the payment would help with the supply of social workers as Australia battles with a domestic violence crisis.