The Australian Government will cut 20% off all student loans as at 1 June 2025, before indexation is applied, to reduce the debt burden for Australians with a student loan. This measure is subject to the passage of legislation.
On this page:
Does the 20% reduction apply to me?
Once legislation passes, if you have an outstanding HELP or other student loan debt balance as at 1 June 2025, the Government will reduce your outstanding debt by 20%.
What should I consider in making a voluntary repayment before or after 1 June 2025?
When you make a voluntary repayment is up to you. You should always seek your own financial advice.
However, you may want to consider the proposed change to reduce your loan balance as at 1 June 2025 by 20% when making your decision.
It may make sense to wait until after the 20% reduction is applied. Making a voluntary repayment after 1 June 2025 will maximise the impact of your repayment and result in a greater reduction in your HELP debt.
The 20% reduction is subject to the passage of legislation.
More information about voluntary repayments is available on the ATO website: Voluntary repayments | Australian Taxation Office
When will I see the 20% reduction on my debt?
The Australian Government has committed to this being the first piece of legislation it introduces when Parliament sits from 22 July 2025.
Once legislation is passed, the ATO will retrospectively apply the 20% reduction to your debt and the indexation that was applied will also be adjusted.
You will not need to do anything to receive the 20% reduction.
Why will my student loan debt go up on 1 June 2025?
Indexation is applied to outstanding student debt by the Australian Taxation Office (ATO) on 1 June each year. This is the law and an automatic part of student loan administration.
On 1 June 2025, indexation of 3.2% will be applied in the normal way to all student debt. This 3.2% has been calculated using the lower of the Consumer Price Index and the Wage Price Index. This figure is calculated by the ATO based on information published by the Australian Bureau of Statistics and is part of the normal annual indexation process that maintains the value of student debt in real terms.
Once legislation is passed, the ATO will retrospectively apply the 20% reduction to your debt and the indexation that was applied will also be adjusted.
What if my HELP loan for recent study is not showing on my ATO account by 1 June 2025? Will it be reduced by 20%?
Any units of study with a census date prior to 1 June 2025 will still be eligible for the 20% reduction – even if those debts have not yet been reflected on your account.
Once legislation comes into effect, the Australian Taxation Office (ATO) will apply the 20% reduction to eligible HELP loans, once they appear on your ATO account.
Individuals will not need to do anything to receive the 20% reduction.
What if I have a HELP debt showing on my ATO account on 1 June 2025 but I pay the debt off after 1 June 2025 (but before the legislation is passed)?
As the 20% reduction applies to your debt as at 1 June 2025, voluntary repayments made after this date will not affect the amount of your 20% reduction.
This means that there may be circumstances where the 20% reduction results in a credit to your HELP account, which may be refunded if you have no outstanding tax or other debts to the Commonwealth.
How much is the indexation that’s going to be applied on 1 June 2025?
The indexation rate will be 3.2% on 1 June 2025 which is based on the ATO’s calculation of the Consumer Price Index (CPI).
How was the indexation rate determined?
The indexation rate will be 3.2% on 1 June 2025 which is based on the ATO’s calculation of the Consumer Price Index (CPI).
In November 2024 the Australian Parliament passed amendments to the Higher Education Support Act, which capped the indexation of HELP and other student loans at the lower of either the CPI or the Wage Price Index (WPI).
For June 2025 the CPI indexation factor was the lower of both the WPI and CPI indexation factors calculated by the ATO. WPI was calculated as 3.7%.
Do I need to do anything to get the 20% reduction?
You will not need to do anything to receive the 20% reduction.
The Australian Government has committed to this being the first piece of legislation it introduces when Parliament sits from 22 July 2025.
Once legislation is passed, the ATO will retrospectively apply the 20% reduction to your debt and the indexation that was applied will also be adjusted.
When will my HELP debt be reduced?
Once legislation is passed by both Houses of Parliament, the Australian Taxation Office (ATO) will retrospectively apply a 20% reduction to your outstanding HELP or other student loan debt as at 1 June 2025 and the indexation that was applied will also be adjusted.
What if I have already paid off my HELP or other student loan debts?
If you have repaid your outstanding student loans and don’t have a student loan debt balance as at 1 June 2025 you will not receive the 20% loan reduction. The reduction will only apply to debt that exists on balances as at 1 June 2025.
How will the 20% reduction be calculated?
The Government will reduce your HELP or other student loan debt amount that is outstanding at 1 June 2025 by 20%.
You can find out how much your outstanding HELP debt will be reduced by using the 20% HELP Debt Reduction Estimator.
20% HELP Debt Reduction EstimatorWill I receive a notification of my updated HELP debt?
The Government will communicate when the 20% debt reductions have been applied. You will be able to check your HELP and other student loan debt via myGov.
Will I be advised when my 20% reduction has been processed?
The Government will communicate when student loan debts have been adjusted.
You will be able to check your HELP and other student loan debt via myGov once the reduction has been applied, to see your new loan balance.
Why is the Government doing this?
Reducing the amount of debt that people currently have by 20% means Australians will have less student debt to pay back.
This directly recognises that many Australians are doing it tough and will take pressure off the costs that Australians have to budget for.
It will particularly help younger Australians, with around 70% of people repaying a HELP debt being 35 or younger. This is a critical time for saving, considering first home buying and or supporting or starting a family.
How can I find details of my outstanding HELP and other student loan debts?
You can check your HELP and other student loan debt via myGov after linking your account to the ATO’s Online Services.
What “other student” loans are included in this change?
As well as HECS-HELP, FEE-HELP, STARTUP-HELP, SA-HELP and OS-HELP, the changes will affect all of the following student loans:
- VET Student Loans
- Australian Apprenticeship Support Loans
- Student Start-up Loan
- Student Financial Supplement Scheme