Students, rejoice! This week, Australians have started having their HECS-HELP debts slashed in the nation’s largest-ever student debt cut. In total, 3 million Aussies will have 20 per cent of their debt wiped, adding up to a massive $16 billion.
The Australian Taxation Office (ATO) began sending out text and email notifications on Saturday, November 22, alerting 100,000 Australians that their debt had been reduced. Another 1.5 million will receive the same message this week, with a further 1.5 million set to be notified the following week.
How much will my student debt be cut by?
With the average HECS debt around $27,600, the average reduction will be around $5,520. You can use the government's estimator tool to see your exact reduction and calculate your compulsory repayments.
How does the student debt cut work?
The 20 per cent student debt reduction will be automatically applied to your loan balance and backdated to June 1, 2025, before indexation. You don't need to do anything to receive the reduction.
The ATO says, “We’ll let you know when we’ve reduced your debt through SMS, email or a message to your myGov inbox. You can view your study loan account in the ATO app or on your ATO Online account through myGov.”
Who will benefit from the HECS debt reduction?
The reduction will apply to:
- 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
When will my student debt be cut?
Education Minister Jason Clare said most Australians will see their debt reduction applied before Christmas.
What if I’ve already paid off my HECS debt?
If you repaid your student loan before June 1, 2025, unfortunately, you won’t be included in the $16 billion debt cut.
What’s changing with HECS repayments?
The government has also lifted the minimum salary threshold for compulsory repayments and reduced repayment rates. For 2025-26, the threshold rises from $54,435 to $67,000, meaning if you earn below this, you don’t have to make repayments.
A new marginal repayment scheme has also been introduced, meaning you only pay a percentage of your income above the minimum threshold. Here’s the breakdown:
- Below $67,000: No repayments
- $67,000 to $125,000: 15 cents for each dollar over $67,000
- $125,001 to $179,285: $8,700 plus 17 cents for each dollar over $125,000
- $179,286 and over: 10 per cent of your total repayment income