The Government has introduced the “Universities Accord (Cutting Student Debt by 20 per cent) Bill 2025”, which amends the Higher Education Loan Program (HELP), the Student Financial Supplement Scheme and other student loan arrangements.
The Bill is designed to make student debt more manageable and includes several key changes:
• One‑off credit – HELP and similar government debts accrued up to 1 June 2025 will automatically be reduced by 20 %. For example, a borrower with an average HELP balance of $27,600 would see their debt fall by around $5,520 under this measure.
• Higher repayment threshold – From 2025‑26 the minimum income at which compulsory repayments become payable will rise from $54,435 to $67,000 and will then be indexed annually in line with wage growth.
• Marginal repayment system – Compulsory repayments will apply only to income above the new threshold. Under the current system, repayments are calculated on all assessable income once a borrower crosses the threshold. Under the marginal system, someone earning $70,000 would repay about $450 each year instead of approximately $1,750.
These reforms implement recommendation 16(b) of the Australian Universities Accord’s Final Report. They complement earlier changes such as indexing HELP debts by the lesser of the Consumer Price Index or Wage Price Index and APRA’s requirement for banks to consider HELP debt when assessing borrowing capacity.
The amendments were announced in the 2025‑26 Federal Budget and will commence the day after the Bill receives Royal Assent. Taxpayers will not need to take any action; the Australian Taxation Office will automatically apply the credit and adjust repayment thresholds accordingly.
