HECS/HELP debt is being reduced through a one‑off 20% cut to eligible student loans that kicked in from mid‑2025, with most practical impacts flowing through to early 2026.

Key change: 20% HECS reduction

  • The Australian Government announced a 20% reduction on all outstanding HELP and certain other student debts that existed on or before 1 June 2025, subject to legislation.
  • This is expected to remove around $16 billion from student loan accounts for roughly 3 million Australians, making it the largest single reduction of student debt in Australia to date.

When the reduction happens

  • The ATO is applying the 20% cut to your study loan balance as at 1 June 2025, before indexation is applied for that year.
  • Notifications (via SMS, email or myGov inbox) began rolling out to borrowers in late 2025, with most account adjustments and any associated refunds expected to be processed by the end of January 2026.

Who gets the reduction

  • Eligible debts include HELP loans (HECS‑HELP, FEE‑HELP, HECS‑HELP for SA, OS‑HELP), VET Student Loans, Australian Apprenticeship Support Loans and some Centrelink‑style student loans.
  • You must have had an outstanding balance on or before 1 June 2025; if your loan was fully cleared before that date, you generally do not get the 20% cut, though those who repaid after 1 June 2025 may be eligible for a refund.

Other HECS changes helping reduce debt

  • Future indexation has been made “fairer” by capping it at the lower of CPI or wage price index, which should slow how quickly HECS grows over time.
  • The compulsory repayment income threshold is rising from about $54,435 to $67,000 in 2025–26, and a new marginal repayment system means lower effective repayment rates at many incomes.

What to do if you have HECS

  • Check your loan balance via myGov linked to the ATO to see when the 20% reduction has been applied and what your new balance is.
  • Make sure your bank details with the ATO are up to date in case you are due a refund because you paid off your debt after 1 June 2025.

Information gathered from public forums or data available on the internet and portrayed here.