Student Debt Relief: What the New Changes Mean for You
In September 2025, the Australian Government passed significant legislation to ease the burden of student debt. Designed to support young Australians and address the rising cost of living, the reforms will reduce existing student loans by 20% and increase the income threshold for compulsory repayments.
This change is expected to benefit more than 3 million Australians, wiping over $16 billion in outstanding debt.
20% Reduction in Student Debt
The automatic 20% reduction applies to loan balances as at 1 June 2025 (before indexation) and covers a wide range of student loan types, including:
- HELP loans (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
The reduction will be applied retrospectively, with indexation calculated only on the reduced balance.
More good news? You don’t need to do anything, the ATO will automatically apply the reduction and notify you once it’s complete.
If you had a HELP debt on 1 April 2025 but paid it off after 1 June 2025, you may receive a credit or refund (provided you don’t have other outstanding tax or government debts).
A useful tool to estimate your reduction is the HELP debt estimator. If you’re unsure about eligibility, PPT can help you work through the details.
Changes to Repayments
The reforms also change how repayments are determined, making it easier for people to manage their finances:
- The minimum repayment threshold for the 2025–26 financial year will rise from $56,156 to $67,000 (up from $54,435 in 2024–25).
- Compulsory repayments will now only apply to income above $67,000.
- Repayments will continue to be managed through the tax system, typically when you lodge your return.
For many, this will mean more disposable income in the short term. However, as repayments will start later and be smaller, it could take longer to fully repay the loan, unless voluntary repayments are made.
What This Means for You
The changes deliver meaningful relief for millions of Australians, but they also come with trade-offs. More cash in hand now can ease cost-of-living pressures, but borrowers who rely only on compulsory repayments may carry debt for longer.
We can help you understand how these changes fit into your broader financial plan – whether that means managing cashflow, planning for voluntary repayments, or exploring strategies to balance short-term relief with long-term goals.
Get in touch with us today to review your student debt position and what these changes mean for your financial future.
