Harborough's MP says degree costs should be cut in half, but added that to balance budgets universities should cut 'low value' courses.
Mr O'Brien says the repayment costs should be halved - a move that could benefit around 500 students a year in the Harborough district alone.
He says the loss of government income could be met by cutting the number of taxpayer-subsidised "low value" university courses, that don’t benefit their students in terms of earnings.
He says these "low value" degrees - which mean students don't repay their loans anyway - should be replaced by courses targeted at higher-earning jobs, either at university or at a re-booted technical education sector.
Mr O'Brien, and fellow Conservative MP Gillian Keegan make the proposal in a document produced by centre-right think tank Onward.
The Harborough MP told the Mail: "It's fair to expect people to pay something towards the cost of their degree. But we should cut the cost in half.
"Many young people in Harborough tell me they worry about the combination of high repayments and high property prices.
"A substantial tax cut for graduates would help ensure they have the same opportunities to get on as previous generations did."
The Onward think tank document recommends ensuring that as many graduates as possible go into high-earning jobs which means they can then afford to repay any loans.
At the moment, a degree that incurs £50,000 worth of debt is not financially worth it for at least a fifth of students, the document concludes. And 83 per cent of students don't repay their student loan in full.
The solution, says the Onward team, is to direct government funding away from any "limited return" degree courses, and into higher level technical education, degree apprenticeships and Institutes of Technology.
"If we could steer people away from low-value courses towards either higher-value university courses, or towards upgraded technical options – like graduate apprenticeships – then we could save enough to pay for a tax cut that will benefit younger graduates, and to invest in further improving technical education," the document says.
"At the moment too many young people are being sold a false promise. Too many are facing hefty repayments for degrees that won’t help them financially, and too few are being offered quality technical and apprenticeship options.
"It’s time to rebalance the system and create a country in which there are more good options and more ladders to climb up.
"The Government should reduce the number of places in low-value university courses. Some people should be diverted to higher value university courses. Others should flow to a dramatically expanded graduate-level technical education sector – a sector that is only just emerging in Britain.
"This would deliver higher earnings for graduates, lower costs for taxpayers and fulfill the potential of the technical education system that has been neglected by policymakers for too long."