HECS debt of millions of Australians to be slashed by 20 per cent as government makes good on $16b election promise

More than three million Australians are set to have their student debt balance slashed within weeks.

The amount owing on university tuition loans will be trimmed by 20 per cent for almost all before the year is out.

WATCH THE VIDEO ABOVE: Millions to get HECS debt relief before Christmas.

The one-off reduction was a major pledge from Anthony Albanese in the lead up to the May federal election.

Aussies who took out a loan to study currently pay it back via deductions from their salary once they start earning above the threshold.

Current and former students are set to be thousands of dollars better off once the reprieve is applied.

How much is my student debt being reduced?

Australians with a higher education loan, including HELP and HECS, are in line for the one-off 20 per cent cut, and the savings will be significant.

Someone with an average debt of $27,600 will see their balance trimmed by more than $5500.

In total, it will wipe more than $16 billion from the amount owed to the Commonwealth.

When will the cuts come into play?

Beginning mid-November through to mid-December, the Australian Tax Office will deliver the reduction to higher education debt balances.

Almost all cuts are expected to be applied before Christmas, and they will be backdated to June 1, before indexation.

“Just out of uni, just getting started, this will take a weight off their back,” Education Minister Jason Clare said.

Will I benefit?

More than three million Australians with the below student loans will benefit from the measures.

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

The Education Department also has an estimator tool which indicates how the 20 per cent reduction will impact your loan.

What do I have to do to get the reduction?

Individuals will not have to do anything.

Those impacted will be informed by a message from the federal government that the ATO has applied the reduction.

“Young Australians with a HECS debt will get a text message from the federal government on the day that their debt is reduced,” Science Minister Tim Ayres said.

Response from students

The National Union of Students (NUS) said the 20 per cent cut was a “long-overdue” measure that will ease the burden on graduates and people still studying.

But it also argued it does nothing to “fix the broken” job-ready graduates scheme which increased the cost of some degrees to encourage people to choose other courses.

“This announcement provides short-term relief, but it doesn’t touch the root cause of the problem — the job-ready graduates package that doubled fees for arts, humanities and social work students,” NUS national president Ashlyn Horton said.

“Labor promised to fix it, and they still can.

“Students don’t want handouts, they want a fair system.”

Hip pocket promise

The student debt cuts were a major promise from Labor in the lead-up to the May federal election.

“We don’t want Australian students burdened by a lifetime of debt,” Anthony Albanese said in April.

In July, Opposition leader Sussan Ley said the opposition would not stand in the way of the relief.

“We do care about students who are struggling with the cost of living and I said we’d be positive where we can be and critical where we need to be,” she said.

About 70 per cent of people repaying a higher education debt are 35 or younger.

What else is the government doing?

On top of the 20 per cent reduction to student debts, the government is also raising the minimum amount before people need to start making repayments on the debt.

The threshold has been lifted from $54,435 to $67,000, and reduces minimum repayments.

For someone earning $70,000, they will have to pay $1300 less each year.

Clare said the government’s measures were “real help with the cost of living”.

“It means more money in your pocket, not the government’s,” Clare said.