Starting today, millions of Australians with student loans will see thousands of dollars wiped from their debt as new HECS and HELP repayment rules take effect.
The federal government has honoured one of its key post-election promises by introducing a 20% cut to outstanding student debt. The legislation passed the Senate in July and applies retroactively from June 1, 2025, before the latest indexation was applied.
Education Minister Jason Clare said implementing the reforms required substantial changes to the Australian Taxation Office (ATO) systems: “They had to write about 50,000 lines of code to get this right. It’s now guaranteed and will benefit three million borrowers.” The reform also raises the minimum income threshold for repayments from $54,435 to $67,000, easing pressure on middle-income households.
A graduate earning around $70,000 a year will now save approximately $50 per fortnight—about $1,300 annually. The average Australian student debt is $27,600, and an average of $5,520 will be wiped from each balance. The ATO will apply the reduction automatically, and no action is required from individuals; changes will be visible via myGov accounts.
Gavan Ord from CPA Australia warned borrowers against following misleading advice from online “finfluencers” encouraging delays in lodging tax returns: “Lodging on time is a legal responsibility and ensures accurate assessment.”
Graduates who fully repay their HECS loans must notify their employer by submitting a “withholding declaration” so additional tax is no longer withheld. Any overpayments from the previous financial year will be refunded after the tax return is processed. These reforms are part of a broader government effort to ease cost-of-living pressures for Australian households.
