The Federal Government has announced major changes to the way student loans are managed, providing relief to millions of Australians facing rising living costs. The changes include a 20% reduction in student loan balances and a new approach to repayment thresholds, giving many people more breathing room in their budgets.
20% Reduction in Student Debt
From 1 June 2025, more than 3 million Australians will benefit from a 20% cut in their student loan balances, wiping over $16 billion in total debt.
This reduction will apply automatically to anyone with the following loans:
- HELP loans (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
How it works:
- The reduction will be applied to your loan balance as at 1 June 2025, before indexation is added.
- Indexation will then only apply to the reduced balance.
- The ATO will process this automatically, and you’ll receive confirmation once the adjustment has been made.
If you had a HELP balance on 1 April 2025 but paid it off after 1 June 2025, the reduction may trigger a credit to your HELP account. If you have no other outstanding debts with the Commonwealth, this credit will be refunded to you.
For an estimate of what your reduction might look like, the Government’s HELP debt estimator is a useful tool—or reach out to us for guidance.
Changes to Repayment Thresholds
The Government has also reformed the way repayments are calculated, primarily by lifting the income threshold before compulsory repayments begin:
- 2024–25 threshold: $54,435
- 2025–26 threshold: $67,000
From the 2025–26 income year onwards, repayments will only apply to the portion of your income above $67,000. Repayments will continue to be made through the tax system when you lodge your annual tax return.
This means:
- Many people will see more disposable income in the short term
- It may take longer to fully repay loans
- Those wanting to reduce their debt faster can still make voluntary repayments
What This Means for You
For students, apprentices, and professionals still carrying education debt, these changes offer welcome relief—particularly in the current cost-of-living environment.
- Debt relief is automatic—no action is needed to access the 20% cut
- Repayments will start later, giving you more flexibility with your income
- Voluntary contributions remain a way to reduce your balance faster if you choose
If you’d like help estimating the impact of these changes on your personal budget or financial planning, the team at Fortis is here to support you.
If you have questions or concerns, please do not hesitate to contact our office to speak to one of our team.
