The Albanese Government passed legislation in July 2025 cutting all student loan debts by 20%, delivering substantial cost-of-living relief to more than three million Australians.

The Universities Accord (Cutting Student Debt by 20 Per Cent) Bill 2025 was introduced into Parliament on 23 July 2025 and passed on 31 July 2025. The 20% debt reduction applies retrospectively to outstanding debt balances as at 1 June 2025, before indexation was applied, wiping more than $16 billion in student debt across the country.

For someone with the average HELP debt of $27,600, the legislation cut their debt by $5,520. The debt reduction applies to all government student loans including HELP, VET Student Loans, Australian Apprenticeship Support Loans, Student Startup Loans and other student loans. The ATO processes the reduction automatically without debt holders needing to take any action.

The legislation also reformed the student loan repayment system to make it fairer. The minimum repayment threshold increased from $54,435 in 2024-25 to $67,000 in 2025-26. A new marginal repayment system was introduced from 1 July 2025, where compulsory repayments are calculated only on income above the $67,000 threshold rather than on total annual income. For someone earning $70,000, this reduces their minimum annual repayments by $1,300.

Combined with previous indexation reforms that removed $3 billion in debt, the total student debt relief measures amount to close to $20 billion for more than three million Australians.

• 20% cut to all student loan debts backdated to 1 June 2025

• More than $16 billion in debt wiped

• Over 3 million Australians benefiting

• Average debt holder ($27,600) received $5,520 reduction

• Minimum repayment threshold increased from $54,435 to $67,000

• New marginal repayment system from 1 July 2025

• Combined with indexation reforms: close to $20 billion total relief

[1] https://www.pm.gov.au/media/albanese-government-cuts-20-cent-all-student-debts

[2] https://ministers.education.gov.au/anthony-albanese/albanese-government-introduces-legislation-cut-every-student-debt-20-cent

[3] https://www.education.gov.au/higher-education-loan-program/20-reduction-student-loan-debt

[4] https://ministers.education.gov.au/clare/second-reading-speech-universities-accord-cutting-student-debt-20-bill-2025