Australia’s Parliament has passed legislation enacting a one-off 20% reduction in student loan balances, fulfilling a key election commitment by the Albanese government.
The measure applies to all Higher Education Loan Program (HELP) debts — including HECS-HELP, FEE-HELP, VET Student Loans, and Apprenticeship Support Loans — held as of 1 June 2025.
The Australian Taxation Office (ATO) will automatically apply the reduction, with no action required from borrowers. The average student with a debt of $27,600 will see approximately $5,520 wiped from their balance.
In addition to the debt cut, the legislation raises the minimum income threshold for compulsory repayments from $54,435 to $67,000, effective from the 2025–26 financial year.
A new marginal repayment system will replace the flat-rate model, meaning repayments will be calculated only on income above the threshold.
For example, someone earning $70,000 will now repay $450 annually — down from $1,750 under the previous system.
These changes aim to reduce repayment burdens and improve affordability for early-career graduates.
The legislation was introduced as the first order of business in the new parliamentary session and passed with support from both the Greens and key crossbenchers.
The ATO is expected to revise loan balances by the end of 2025, with the total relief estimated at $16 billion across more than three million Australians.
While the measure has been welcomed as a step toward intergenerational equity, critics note that indexation still applies to remaining balances, potentially offsetting long-term gains.
