Should graduates get a special first home buyer grant?

In his Melbourne University speech yesterday, Kevin Rudd used an argument Jenny Macklin had long made against student debt:

Since 1996, the debt burden for university students has increased from $4.5 billion to nearly $13 billion. How can a young person build a deposit for a home if they are carrying a massive education debt?

Leaving aside technical objections – the size of student debt is irrelevant to annual repayments, which is what affects ability to service a mortgage – conceptually why should graduates get this kind of special treatment?

According to an ABS survey, the vast majority of university students give as the main reason for their current study as something to do with work. The same survey shows that graduates earn significantly more than other people – about half as much again, on average, as someone whose highest qualification is Year 12. The gap is even larger for the typical household breadwinner, the male partner. On my rough calculations (the data I have is not broken down by age, and does not take account of family benefits) male graduates are still about 40% ahead of males with Year 12 only even after tax and HECS repayments are deducted. Compounding the income gap, a majority of graduates aged less than 45 who have partners are with someone who also has a degree.

So though graduates are caught up in the general home affordability problem, they remain in a relatively strong financial position compared to the rest of the population. By easing financial burdens relating to student debt, Labor would be giving the people least in need of extra assistance to buy a home an added boost – a special first home buyer grant for the privileged. Worse, the extra cash would be used to further bid up house prices, worsening affordability for others. And this is from the egalitarian party?