HECS repayment changes in Australia as government slashes loans by 20 per cent

Anthony Albanese 's government will cut 20 per cent off all student loan debts, wiping around $16billion for about three million Australians.
The policy - central to Labor's re-election campaign - is now set to be backdated to June 1, with the Greens expected to back Labor's legislation in the Senate during the next sitting of Parliament in coming weeks.
Under the plan, a graduate with an average student debt of $27,600 will see their loan reduced by $5,520.
Albanese's proposed reform would apply to all Higher Education Loan Program, vocational education and training student loans, Australian Apprenticeship Support Loans and other income-contingent student loans.
'Our whole nation benefits when we make it easier for people to access education. This is about opening the doors of opportunity – and widening them,' he said when announcing the plan.
The reforms would also raise the threshold for repayment from $54,453 to $67,000 for the 2025-26 financial year, and lower the rate to be repaid.
For someone on a middle income of $70,000, this will mean they will pay around $1,300 less a year in repayments.
Education Minister Jason Clare said the cuts to student loans could be the first piece of legislation that Labor introduces when Parliament returns on July 22.
How much your student debt will be wiped by is revealed in the table above
'The legislation will cut 20 per cent off your student debt and backdate it to 1 June, before indexation was applied,' Mr Clare said.
'This is a game-changer for the more than three million Australians with a student loan.'
After the legislation is passed, the tax office will apply a one-off 20 per cent reduction to a student loan - without borrowers having to do a thing.
This 20 per cent reduction will be calculated based on the amount of your HELP debt as at 1 June 2025, before any indexation is added.
The government will notify you when the changes are implemented, and balances can be checked via myGov.
The gap between the newly discounted repayments, and what tertiary institutions charged the students, will be funded by taxpayers and government borrowing.
This builds on a $3billion policy introduced last year, which links student debt indexation to the lower of the wage price index or the consumer price index.
Without it, graduates could have faced another steep increase, like in 2023, when indexation soared to 7.1 per cent - up from 3.9 per cent the year before - adding $1,759 to the average student debt of $24,770.
The Higher Education Contribution Scheme in 1989 replaced the old system of free university education that had existed since 1974.
Graduates pay a higher proportion of their salary on their student debt the more they earn, rising from one per cent under the existing $54,435 minimum repayment threshold to 10 per cent for those earning more than $159,664.
Labor was re-elected in a landslide in May, and claimed three inner-city seats in Melbourne and Brisbane from the Greens that have a higher proportion of university students, including that of former leader Adam Bandt.

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