In a major step toward easing the financial burden on students and graduates across Australia, legislation to reduce student loan debts by 20% has been introduced into Parliament.
The Australian Government has introduced new legislation today aimed at easing the financial burden on students and graduates with a student loan. If passed, the reforms will deliver:
- A one-off 20% reduction in HELP and student loan balances, effective from 1 June 2025
- Lower repayment amounts, making it easier to manage other expenses
- Higher income thresholds before repayments are required, allowing graduates to keep more of their earnings
Once legislation is passed, the Australian Taxation Office (ATO) will retrospectively apply the 20% reduction and the indexation that was applied on 1 June 2025 will also be adjusted. The change will apply to all Higher Education Loan Program (HELP) and other student loans including VET Student Loans (VSL), Australian Apprenticeship Support Loans and Student Startup Loans (SSL).
The government is also making student repayments fairer by increasing how much people can earn before they are required to repay their debt and lowering repayment amounts under a new marginal repayment system. The new repayment threshold will change from $54,435 in 2024-25 to $67,000 in 2025-26 delivering significant cost of living relief for students.
This builds on the Government’s action last year to cap the indexation rate on HELP and other student loans to the lower of either the Consumer Price Index (CPI) or the Wage Price Index (WPI) and applied that change retrospectively from 1 June 2023.
In addition, the Government has also made it easier for those with a student loan to get into the housing market by asking the banking regulators to review their rules. Banks will be able to consider the circumstances of individuals and will no longer need to factor in a person’s HELP debt if they have almost repaid their debt. The changes are expected to enable more borrowers with HELP debts to responsibly secure a home loan earlier.
“We promised we would cut your student debt by 20 per cent and we are delivering.
“This is a big deal for 3 million Australians, in particular, a lot of young Australians.
“Just out of uni, just getting started, this will take a weight off their back.
“It will also cut their annual repayments. For someone earning $70,000 a year, it will cut the amount they have to repay every year by $1,300.”
“That’s real help with the cost of living. It means more money in your pocket, not the government’s.”
These changes are expected to provide meaningful financial relief to thousands of Australians, helping them better manage their education debt and plan for the future.
Further information about the changes can be found at: 20% reduction of student loan debt.