Treasurer Joe Hockey also appeared to back the idea.
"It shouldn't be different to any other loan," he told the Nine Network.
Abbott later moved quickly to hose down concerns the Government could pursue students debts beyond the grave.
"This Government is not going to change the existing rules, and the existing rules in respect of university debt ... is that they cease on decease," he said.
Coalition frontbencher Bruce Billson revealed the Government is talking to Britain about recovering debts from workers overseas.
Currently, any debts owed on the loans are cancelled upon death.
It's rare for people to die before paying off their student loans.
Curtin University's National Centre for Student Equity in Higher Education says the Government's plans to charge compound interest on student loans could mean students had debts for longer.
"Fewer students will be expected to pay off their debt in full in their lifetime," the report says.
A student who graduates with a A$50,000 debt would have to earn an average of A$80,000 a year to pay it off before retirement.
A student who earned an average of less than A$80,000 a year throughout their working life would still have a debt when they turned 70.
- AAP
