Has my student loan been cut?

Parliament has cut student loan debt and changed how much you can earn before the debt needs to be repaid. We look at the impact.

What do we mean by ‘student debt’?

The Higher Education Loan Program (HELP) provides financial help for students attending approved Australian higher education courses (see How student loans work). For eligible students, HELP loans up to a total of $126,839 are available for most degrees* and $ 182,172 for higher value degrees like medicine, to cover the cost of tuition.

HELP debt is repaid once a student starts earning an income, with the repayment rate increasing as income increases. The average higher education student debt in Australia is around $27,000 and takes just over 8 years to repay. Currently, close to 3 million students have loan debt.

The recent changes impact on all the HELP variations and VET Student Loans, Australian Apprenticeship Support Loans, Student Start-up Loans, and the Student Financial Supplement Scheme.

What has changed?

On 31 July 2025, Parliament passed the Universities Accord (Cutting Student Debt by 20 Per Cent) Bill 2025. The Bill enacts three changes:

• Reduces student debt as at 1 June 2025 by 20%.
• Increases the repayment threshold – the amount you can earn before you need to start repaying your student loan – from $54,435 to $67,000 (which will increase with growth in wages), and
• Introduces a marginal repayment system changing how compulsory student loan repayments are calculated. Instead of being based on a percentage of the repayment income, they are now calculated only on income above the new $67,000 threshold.

One-off 20% reduction in student debt

If you had student loan debt on 1 June 2025, your debt has been reduced by 20%. This means that someone with an average HELP debt of $27,600 will see around $5,520 removed from their outstanding student loan balance.

You do not need to do anything for the 20% reduction to apply - the ATO will automatically apply the reduction to your 1 June 2025 loan balance and then recalculate indexation to the balance (indexation applies from 1 June each year to loan balances).

However, the ATO have warned that there is a lag in applying the reduction to student loan balances. The ATO’s systems were not set up to manage the reforms and they are progressively working through the changes - while the reduction will be visible for most people before the end of 2025, some more complex cases might not be resolved until early 2026. You can check your student debt through your MyGov account if it is linked to the ATO.

If you want an indication of what the reduction will mean to you, you can calculate what the reduction will mean to you here.

What if I have paid too much?

If your student loan is in credit after the 20% reduction is applied, the ATO will refund the amount to you if you have no other outstanding tax or other government debts.

Repayment threshold and repayment calculation changes

From 1 July 2025, the point at which you need to start repaying your student loan has increased from $54,435 to $67,000 (indexed to wages growth).

How your repayments are calculated has also changed. Previously, the amount you paid was based on an increasing percentage of your ‘repayment income’ - up to 10% once your income reached $159,664. Now, the repayment calculation is based on marginal rates.

2025-26 study and training loan repayment thresholds and rates

Source: Australian Taxation Office

What’s repayment income?

Repayment income is your taxable income plus your total net investment loss, reportable fringe benefits amounts, reportable super contributions and exempt foreign employment income.

*From 1 July 2025.