Twenty per cent came off every outstanding student loan balance that existed on 1 June 2025. That is law, not a proposal. The Universities Accord (Cutting Student Debt by 20 Per Cent) Act 2025 received Royal Assent on 2 August 2025 as Act No. 30 of 2025, and the Australian Taxation Office has since confirmed it has finished processing the reduction on every eligible account.
For a person sitting on the average balance of about $27,600, that was roughly $5,520 gone. Nobody had to apply. Nobody had to fill in a form. The credit simply appeared.
The second change is quieter and, for most people actually working in Australia, it matters more. From the 2025 to 2026 income year the minimum compulsory repayment threshold jumped to $67,000, and repayments are now calculated only on the income above that line rather than on your entire salary. That reshapes what comes out of your pay every fortnight, permanently, in a way a one off balance cut does not.
The third thing worth knowing is the thing most people are actually searching for when they type "how to get HECS debt waived": whether the debt can be cancelled outright. For almost everyone the answer is no, and the honest version of that answer is set out further down.
What changed, when it applies, and whether you need to do anything
| Change | The figure | Applies from | Action required |
| One off reduction to student loan debts | 20% of the balance | Balance as at 1 June 2025, before indexation | None. Applied automatically by the ATO |
| Indexation capped at the lower of CPI or WPI | 2023 rate cut from 7.1% to 3.2%; 2024 rate cut from 4.7% to 4.0% | Backdated to accounts existing on 1 June 2023 | None. Credits applied automatically |
| Minimum compulsory repayment threshold | $67,000 (2025-26), $69,528 (2026-27) | 2025-26 income year, so from 1 July 2025 | None. Applied through your tax return |
| Marginal repayment model | 15c per dollar above the threshold, then 17c in the second bracket | 2025-26 income year | None |
| Threshold indexation method | Now indexed to average weekly earnings | 2026-27 onwards | None |
| Debt waiver on general financial hardship grounds | Does not exist | NA | NA |
Everything in that table is legislated and in force. There is no measure in this article that is merely announced or sitting before Parliament. If you read a claim about a further cut or a further threshold rise, check the date on it, because several proposals from earlier years were reported as though they were law before they were.
The 20 per cent cut reduced a balance, it did not erase a debt
The reduction applied to the debt as it stood on 1 June 2025, calculated before that year's indexation was added. Indexation for 2025 was 3.2%, and it was then recalculated against the smaller balance, so the sequencing worked in the borrower's favour rather than against it.
The coverage is broad. It was not limited to HECS-HELP. The Act reached HECS-HELP, FEE-HELP, STARTUP-HELP, SA-HELP and OS-HELP, along with VET Student Loans, Australian Apprenticeship Support Loans, Student Start-up Loans and the old Student Financial Supplement Scheme.
Two limits are worth being blunt about.
If you had cleared your balance before 1 June 2025, you got nothing. The Department of Education's position is unambiguous: no debt balance on that date means no reduction. People who made a large voluntary repayment shortly before that date were, in effect, penalised for paying early. And if the cut exceeded what you still owed, the excess became a credit on your ATO account, refundable only if you have no outstanding tax bill or other Commonwealth debt.
The Parliamentary Library's digest put the long term cost at about $16 billion, with roughly $700 million inside the four year Budget estimates. It is a large transfer. It is also a one off, and your balance restarts its normal indexation cycle the following June.
Indexation is now capped at the lower of CPI or the Wage Price Index
This is the change that quietly does the most work over a long repayment life, and it came from the Universities Accord (Student Support and Other Measures) Bill 2024.
Before it, HELP debts were indexed to the Consumer Price Index alone. In June 2023 that produced a 7.1% increase, at a point when wages were nowhere near keeping pace. The new rule sets indexation at whichever is lower, CPI or the Wage Price Index, backdated to every eligible account that existed on 1 June 2023.
The recalculated rates now sit on the ATO's own indexation table:
- 2023: 3.2%, down from 7.1%
- 2024: 4.0%, down from 4.7%
- 2025: 3.2%
- 2026: 2.8%
The government stated that the backdated credits removed about $3 billion in student debt across more than three million people, an average of roughly $1,200 each. On a $30,000 balance, the 2023 change alone was the difference between $2,130 added and $960 added.
The practical effect is that your debt can no longer grow faster than wages are growing. That is not the same as a debt that does not grow. Indexation still happens every 1 June, and 2.8% on a $40,000 balance is still $1,120 added in a year.
The repayment change most students will feel first
If you are finishing a degree in Australia and about to start work, this is the section that affects your bank balance.
For the 2025-26 income year the minimum repayment threshold is $67,000. For 2026-27 it is $69,528. Below that, your compulsory repayment is zero.
Above it, repayments are now marginal. The old system took a flat percentage of your entire repayment income the moment you crossed the line, which meant a small pay rise could trigger a disproportionate jump in what you owed. The new system charges only on the slice above the threshold.
The current brackets, from the ATO:
| Income year | Threshold | Rate structure |
| 2025-26 | $67,000 | 15c per $1 above $67,000, then $8,700 plus 17c per $1 above $125,000, capped at 10% of total income from $179,286 |
| 2026-27 | $69,528 | 15c per $1 above $69,528, then $9,028 plus 17c per $1 above $129,717, capped at 10% of total income from $186,051 |
Worked through, on 2025-26 settings: someone earning $70,000 repays $450 for the year. At $80,000 it is $1,950. At $100,000 it is $4,950. The threshold that would otherwise have applied in 2025-26 was $56,156, so a graduate on a modest starting salary moved from a compulsory repayment to none at all.
High earners get nothing from this. From $179,286 in 2025-26 the ATO applies a flat 10% of total repayment income, which is where the old system landed anyway. The benefit is concentrated at the bottom and middle of the range, which is where most recent graduates sit.
One administrative note: separate rules for people who pay tax by instalments began on 1 July 2026, so if you are a sole trader or contractor with PAYG instalments, check how your study loan component is being collected rather than assuming it works the way it did.
Budgeting around a real number here is more useful than budgeting around the headline cut. If you are working out what you can afford in rent while repaying, our breakdown of student living costs in Brisbane and the Sydney versus Melbourne accommodation cost comparison give you the other side of the equation.
Can a HECS or HELP debt actually be waived?
For almost everyone, no. There is no hardship application that cancels a HELP debt, no forgiveness scheme after a set number of years, and no route through bankruptcy. Any page promising otherwise is either out of date or selling something.
What genuinely exists is narrow.
Death of the debtor. The trustee or executor lodges outstanding returns up to the date of death, and any compulsory repayment shown on that final notice of assessment is paid from the estate. After that, the ATO cancels the remainder. Neither the family nor the trustee is required to pay the rest of the loan.
Special circumstances withdrawal from units. This is not a waiver of an accumulated debt. It re-credits the HELP balance for specific units you could not complete. Your higher education provider decides it, not the ATO, and you must show all three of these: the circumstance was beyond your control, it did not fully affect you until on or after the census date for the unit, and it made completing the unit impracticable. Applications generally go in within 12 months of withdrawing or of the date you were scheduled to undertake the unit, though a provider can extend that with evidence. If the provider refuses, you can seek internal review within 28 days and then external review through the Administrative Review Tribunal.
Illness, a family emergency, a serious accident or the collapse of a provider can meet that test. Changing your mind about a course, failing it, or disliking the teaching will not.
Deferral, which is not relief. You can ask the ATO to defer or amend a compulsory repayment where paying it would cause serious hardship, or for reasons including natural disaster, death, serious illness, or difficult personal circumstances such as family violence or financial abuse. This buys time on one year's repayment. The debt itself stays, and it is still indexed each 1 June.
That is the whole list. There is no fourth option.
If you are an international student, most of this does not apply to you
HECS-HELP is available to Commonwealth supported students who are Australian citizens, eligible permanent humanitarian visa holders, or New Zealand Special Category Visa holders meeting the residency requirements. Student visa holders are not eligible, which means most international students in Australia pay tuition upfront and never accrue a HELP debt at all.
If you are on a student visa, the takeaway is indirect. The graduates you compete with for rentals now have a lower compulsory repayment and slightly more disposable income than they did two years ago. That does not help you.
Your equivalent lever is fixing your housing cost before you arrive, since that is the largest controllable line in a student budget. Start with the types of student housing available in Australia and the comparison of university halls against private PBSA, then read up on signing a lease as a student visa holder before you commit to anything.
Frequently asked questions
Do I need to apply for the 20% HECS debt reduction?
No. The reduction was applied automatically by the ATO to every eligible account with a balance on 1 June 2025, and the ATO has confirmed processing is complete. If you cannot see it, log in to myGov and check the loan account transaction history rather than assuming you were missed.
What if I paid off my HECS debt before 1 June 2025?
You do not receive the reduction. The Department of Education has stated plainly that if you had no student loan balance as at 1 June 2025, the 20% cut does not apply to you. There is no retrospective refund for balances already cleared.
How much will I actually repay on my HECS debt each year now?
On 2025-26 settings, nothing below $67,000, then 15 cents in each dollar above it. That is $450 at $70,000 of repayment income and $1,950 at $80,000. For 2026-27 the threshold rises to $69,528. Check the current ATO table before relying on any figure, because these thresholds move every year.
Can I get my HECS debt waived because I cannot afford it?
No. Financial hardship allows you to apply to the ATO to defer or amend a compulsory repayment for a year, not to cancel the debt. The balance remains and continues to be indexed on 1 June each year.
Does a HECS debt die with you?
Effectively, yes. The estate pays any compulsory repayment shown on the final tax return covering the period up to death, and the ATO cancels the rest. The debt is not passed to family members.
Is HECS indexation still going up?
Yes, but capped. Indexation is now the lower of CPI or the Wage Price Index. It was 3.2% in 2025 and 2.8% in 2026, applied on 1 June each year. Your balance still grows if you are not repaying, just no faster than wages.
Do international students get HECS debt relief?
No, because student visa holders cannot access HECS-HELP in the first place. HECS-HELP is limited to eligible Australian citizens, permanent humanitarian visa holders and qualifying New Zealand Special Category Visa holders in Commonwealth supported places.
Bottom line
The 20% cut was real, large and automatic, and it is finished. If you had a balance on 1 June 2025 it is already reflected in your account, and there is nothing further to claim. Treat it as a one time event rather than the start of a trend, because nothing currently before Parliament extends it.
The repayment reform is the one to plan around. A threshold of $67,000 rising to $69,528, combined with a marginal calculation, changes what lands in your account every pay cycle for years. If you are choosing between a room you can comfortably afford and one that requires a flatmate you have not met, run the numbers on the actual repayment figure rather than the headline. Our guide to tenant rights in private rentals is worth reading before you sign anything that assumes an income you do not yet have.
The caveat is the part people skip. This is debt reduction, not debt cancellation. A 20% cut on a $50,000 balance still leaves $40,000, indexed every June, repayable for most of a working life. If someone tells you there is a way to have it wiped, ask them to point at the section of the Higher Education Support Act 2003 that says so.
