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The 20% reduction of student loan debt has passed Parliament. |
The Australian Government’s ‘Universities Accord (Cutting Student Debt by 20 per cent) Bill 2025’ (the Bill) passed Parliament on 31 July 2025 and received Royal Assent on 2 August 2025.
The Australian Taxation Office will now commence work to retrospectively apply the 20% reduction to student debts as at 1 June 2025 and will also adjust the 1 June 2025 indexation to only apply to the balance once the 20% reduction has been applied.
The Bill, now passed:
- provides a one-off 20% reduction on student loan debts incurred on or before 1 June 2025
- increases the minimum repayment threshold for student loans from $54,435 in 2024–25 to $67,000 in 2025–26
- introduces a marginal repayment system for compulsory student loan repayments that will change the repayment calculation method to be based on the portion of a person’s income above the new $67,000 threshold, rather than being based on total income
It is estimated that the one-off 20% debt reduction measure will benefit over 3 million Australians with a student loan debt and remove over $16 billion in HELP and other student debt. Australians with any one of the following loans will benefit from the legislated reduction:
- any of the HELP loans, including HECS-HELP, FEE-HELP, STARTUP-HELP, SA-HELP, OS-HELP
- VET Student Loans
- Australian Apprenticeship Support Loans
- Student Start-up Loans
- Student Financial Supplement Scheme loans
Implementation for higher education loans
HELP providers will not have to do anything for HELP loans to be eligible for the 20% reduction. All HELP loans with census dates on or prior to 1 June 2025 will be in scope to receive the 20% reduction.
Providers are reminded of their reporting obligations under the Higher Education Support Act 2003 (HESA), and to ensure that loans are reported within 14 days of the census date. However, late reported HELP loans that are eligible will still have the reduction applied by the ATO to ensure students are not disadvantaged.
The 20% reduction will be rolled out in stages and the ATO expects most reductions will be applied before the end of the calendar year. Some complex cases may take longer to complete. More information about the 20% reduction and repayment changes is available on the ATO website.
HELP balances
Students’ available HELP balances will also be re-credited by the amount of the reduction they received against their HELP and VSL debts. The re-credit is only available to be consumed to support additional future study after it is received in TCSI and visible in myHELPbalance. This may take some weeks after the reduction is visible in the students’ ATO myGov account. Re-crediting of the HELP balance is capped at the current HELP loan limit.
A student must have sufficient available HELP balance on the census date for their unit of study in order to access Commonwealth assistance. If a student does not have sufficient available HELP balance for their proposed study, they will have to pay their student contribution amounts or tuition fees upfront. Providers should encourage students to review their HELP balance at myHELPbalance before making any decisions about further study.
Students who do not have sufficient available HELP balance to continue studying after 1 June 2025 should talk to their provider about what options or financial assistance are available to them to continue studying without access to Commonwealth assistance.
Further information is available via the 20% reduction of student loan debt page.
Information on the 20% reduction was also provided during the TCSI July 2025 Provider Webinar.
