The Australian government’s promise to ease the burden of student debt has officially become law, delivering a 20% reduction for millions of Australians with student loans. If you’re one of the more than three million people with a Higher Education Loan Program (HELP) or other student loan, here’s what the change means for you, when it applies, and how you’ll benefit.
Who Is Eligible?
The 20% reduction applies broadly across most student loan types, including:
- HELP debts (formerly HECS)
- VET Student Loans
- Australian Apprenticeship Support Loans
- Older schemes, such as the Student Financial Supplement Scheme
To qualify, you must have had an outstanding student loan debt on 1 June 2025.
How the Reduction Works
- The 20% cut is calculated on your loan balance as at 1 June 2025, before annual indexation was applied.
- Even if you’ve made repayments since 1 June—or even paid off your debt entirely—you’ll still receive the full reduction based on your balance on that date.
- If your loan has been paid off since 1 June, the reduction could result in your ATO account showing a credit balance, which may trigger a refund (unless you have other tax debts).
- If you paid off your loan in full before 1 June 2025, you won’t benefit, as the reduction only applies to debts that existed on that date.
Timing and Process
- The ATO is responsible for applying the reduction and updating loan balances.
- Most eligible Australians should see the reduction applied before the end of 2025.
- You don’t need to do anything – the reduction is automatic.
- Once processed, you’ll receive a notification, and you can check your new balance in myGov or the ATO app.
Tax Returns and Refunds
- Don’t delay lodging your 2025 tax return while waiting for the reduction to appear – it won’t affect your tax lodgement process.
- If your loan reduction results in a credit, refunds will be processed to your nominated bank account.
- Make sure your bank details with the ATO are up to date to avoid delays.
- If your loan ends up being fully repaid, remember to notify your employer so they stop withholding additional student loan repayments from your pay.
Conclusion
The 20% student loan reduction is welcome relief for millions of Australians managing education debts. Whether it means lowering your balance, clearing your loan completely, or even putting money back in your pocket through a refund, the benefit will apply automatically—no paperwork required. The key is to stay informed, keep your ATO details current, and continue lodging your tax returns as usual. By the end of 2025, you should see the positive impact reflected in your account.
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