Millions of Australians have had their student loans cut as the federal government’s 20% debt reduction measure comes into effect.
The one-off debt reduction measure will benefit over three million Australians with the first 100,000 having received notifications via SMS text message, email or their myGov inbox.
The Australian Government’s Universities Accord (Cutting Student Debt by 20 per cent) Act became law on 2 August 2025. The Australian Tax Office (ATO) has started processing reductions mid-November.
The biggest student debt cut in Australia’s history, the legislation will remove over $16 billion in various student loans, including HELP (Higher Education Loan Program) and VET (Vocational Education and Training) loans.
Federal Education Minister Jason Clare said the government recognises that many Australians are doing it tough and this will take pressure off the costs that Australians have to budget for.
“This will cut the debt of millions of Aussies by thousands of dollars. The average HECS debt today is about $27,000. This will cut that debt by about $5,500 dollars. That’s a lot of money and that’s a lot of help for a lot of Australians.”
It will particularly help younger Australians, with around 70% of people repaying a HELP debt being 35 or younger. A critical time for saving, considering first home buying and supporting or starting a family.
The 20% reduction will be calculated based on what a person’s HELP debt amount was as at 1 June 2025, before indexation was applied.
Students can use the estimator to see an indicative amount of the 20% reduction on an outstanding HELP debt.
While most people will get their reduction before the end of 2025, more complex reductions may not be processed by the ATO until early 2026.
Students are advised to check that their contact details are up to date with the ATO to ensure they receive the notification.
