Understanding the 20% HELP loan reduction, new $67,000 threshold, and 3.2% indexation changes.
The Australian Government implemented two major changes to the HECS/HELP system: a 20% reduction in all student loan debts and a significant increase in the minimum repayment threshold. These changes aim to make the student loan system fairer and reduce the financial burden on graduates, particularly helping younger Australians who are trying to save for a home or start a family.
The 20% debt reduction was applied to all outstanding HECS/HELP debts as of June 1, 2025, before the annual indexation. The legislation was introduced when Parliament sat from July 22, 2025. The ATO retrospectively applied the 20% reduction and adjusted the indexation. The new repayment threshold of $67,000 took effect from July 1, 2025, for the 2025-26 financial year.
Nothing. The changes were automatically applied by the ATO. If you had an outstanding HECS/HELP debt as of June 1, 2025, the 20% reduction was automatically applied to your balance. You can check your updated debt balance through myGov.
The 20% reduction was applied to your total outstanding debt as of June 1, 2025. For example, if you had a $10,000 HECS debt, it was reduced to $8,000. The average HECS debt of $27,600 was reduced by approximately $5,520. This reduction was applied before the annual indexation of 3.2% for 2025.
Use our HECS/HELP Repayment Calculator to see your current repayment amount and estimated payoff timeline.
On June 1, 2025, indexation of 3.2% was applied to all student debt as per normal. This rate was based on the lower of the Consumer Price Index (CPI) and the Wage Price Index (WPI). The ATO retrospectively applied the 20% reduction and adjusted the indexation accordingly.
This was a personal decision that depended on your financial situation. If you paid off your debt before June 1, 2025, you didn't receive the 20% reduction. If you made a voluntary repayment after June 1, 2025, it didn't affect the amount of your 20% reduction. In some cases, the 20% reduction resulted in a credit to your HELP account, which could be refunded if you had no other outstanding debts to the Commonwealth.
Around one million Australians benefited from these changes. The changes applied to all types of student loans, including HECS-HELP, FEE-HELP, VET Student Loans, Australian Apprenticeship Support Loans, and Student Start-up Loans. Around 70% of people repaying a HELP debt are 35 or younger, so this particularly helped younger Australians during a critical time for saving and major life decisions.