20% Student Loan Debt Reduction

What You Need to Know

The Australian Government has passed new legislation to significantly reduce the burden of student loans. Under the Universities Accord (Cutting Student Debt by 20 per cent) Bill 2025, more than 3 million Australians will see their student debt reduced by 20% automatically.

This one-time reduction, combined with earlier changes to indexation, will remove around $20 billion in student loan debt nationally.

💰 What’s Changing?

20% Reduction in Loan Balances

If you have a student loan, your debt will be reduced by 20%, automatically applied by the ATO. No action is required on your part.

The reduction will apply to your loan balance as of 1 June 2025, before indexation is added. Indexation will only be calculated on the new, lower balance.

📌 Do You Qualify?

You will receive the 20% reduction if you have any of the following student loans:

  • HELP loans, including:
    • HECS-HELP
    • FEE-HELP
    • OS-HELP
    • SA-HELP
    • STARTUP-HELP
  • VET Student Loans
  • Australian Apprenticeship Support Loans
  • Student Start-up Loans
  • Student Financial Supplement Scheme

🔁Already Paid Off After June 1?

If you had a HELP or student loan on 1 April 2025 but paid it off after 1 June 2025, the 20% reduction may trigger a credit to your HELP account. If you have no other Commonwealth debts, this credit will typically be refunded to you by the ATO.

📉 Reduced Indexation = Slower Debt Growth

In addition to the 20% cut, the Government has already introduced indexation caps, ensuring student loans only increase in line with the lower of:

  • The Wage Price Index (WPI) or
  • The Consumer Price Index (CPI)

This means your loan will never grow faster than wages, easing long-term repayment pressure.

🧾Repayment Threshold Is Increasing

From the 2025–26 financial year, the minimum income threshold for making compulsory student loan repayments is increasing:

  • 📈 New threshold: $67,000/year
  • 💼 Repayments apply only to income above $67,000
  • Collected through the tax system, when lodging your tax return

This change means many Australians will have more disposable income and may delay repayments until later in their career.

🧮 Want to Estimate Your New Balance?

Want to see how much your student loan could be reduced by?

👉 Use the HELP Indexation Credit Estimator

Or, contact us and we’ll help you figure it out.

📬 What Do I Need to Do?

Nothing — the ATO will apply the reduction automatically.
But if you’d like support understanding the impact or checking your loan details, we’re here for that.

🙋 We’re Here to Answer Your Questions

  • Not sure if you’re eligible?
  • Confused about how this affects your repayments?
  • Wondering if you’re entitled to a refund?

We’re here to help. Whether you’re a current student, graduate, or recently repaid your loan, we can help you understand your options.

Disclaimer: This website is designed for informational and educational purposes. Although we exert diligent efforts to maintain the accuracy and reliability of the content, we must disclaim liability for any errors, omissions, or inaccuracies. The content provided is “as is” and is not accompanied by warranties, whether expressed or implied. It should not serve as the sole basis for financial or legal decisions.

Given the evolving nature of financial regulations and conditions, the accuracy and reliability of information may change over time. Users are urged to exercise due diligence and consult with a qualified financial professional for personalised advice. Viden Advisory Pty Ltd bears no responsibility for direct or indirect consequences, encompassing financial loss or legal matters stemming from the use or misuse of the information on this website.

Please be aware that the information, by no means, is a substitute for financial advice.

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