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Students happy about Australian Government's Announcement of 20% Reduction in Student Loan Debt
News | January 27, 2025

Australian Government Announces 20% Reduction in Student Loan Debt

On 3 November 2024, the Australian Government revealed a significant change to student loan policies, announcing a 20% reduction in the HELP and other student loan debts for all Australians. This measure aims to alleviate financial pressure and builds upon earlier initiatives introduced on 2 November 2024 to make student loan repayments fairer.

This one-time 20% debt reduction will directly benefit 3 million Australians, wiping out $16 billion in outstanding student loans. Additionally, changes to loan indexation, which cap the applied rate to the lower of either the Wage Price Index or the Consumer Price Index (backdated to 2023), will remove another $3 billion in debt. These combined measures will reduce the total student loan debt by nearly $20 billion.

Why Are These Changes Happening?

The 20% reduction in HELP and other student loans is designed to ease the financial burden on Australians. Many individuals face growing economic pressures, and this initiative seeks to provide relief, particularly for younger Australians.

Approximately 70% of people repaying a HELP loan are aged 35 or under. This reduction will support those at a critical stage in life, allowing them to focus on saving, buying a first home, or starting a family.

Who Benefits from the Reduction?

Australians with any of the following student loans will see their debt reduced:

  • HELP loans (including HECS-HELP, FEE-HELP, STARTUP-HELP, SA-HELP, and OS-HELP)
  • VET Student Loans
  • Australian Apprenticeship Support Loans
  • Student Start-Up Loans
  • Student Financial Supplement Scheme

Eligible individuals can use an estimator tool to calculate the approximate impact of the 20% reduction on their outstanding student loan balances.

What’s Next?

After legislation is passed, the Australian Taxation Office (ATO) will automatically apply the 20% debt reduction to individual loan balances before the annual indexation is added on 1 June 2025. Only the remaining balance will be subject to indexation.

This process will happen automatically, requiring no action from loan holders. To learn more about this policy, visit the 20% reduction off all student debt fact sheet.

By combining debt reduction and fairer indexation measures, the Government is addressing financial challenges faced by Australians and making student loan repayments more manageable.

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