When will student debts be wiped in Australia?: ATO begins sending messages to students
Millions of Australians are set to benefit from a historic $16 billion cut to student debt in the coming weeks.
About 100,000 will receive the “best text message ever” over this weekend from the Australian Taxation Office, informing them their Higher Education Loan Program (HELP) debts have been reduced by 20 percent.
Education Minister Jason Clare described the move as the biggest reduction in student debt in Australia’s history. “This will be $16 billion of debt wiped off the backs of young Australians,” he said on Nine on Saturday.
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By continuing you agree to our Terms and Privacy Policy.“For many young people just out of TAFE, university, or leaving home, this is a significant relief,” Mr Clare said.
How much will student debts go down?
Australians with university tuition loans, including HELP and HECS debts, are seeing their balances trimmed by 20 percent, backdated to June 1, 2025, prior to indexation.
Someone with an average debt of $27,600 will have more than $5,500 wiped from their balance, translating to around $1,300 saved annually on minimum repayments if earning $70,000.
Education Minister Jason Clare said the relief is already making a big difference. “Just out of uni, just getting started, this will take a weight off their back,” he said.
The reduction is being automatically applied, beneficiaries simply receive notification via text or email once their debt is adjusted.
Who benefits and how much?
The cut benefits holders of:
- HELP loans (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 Government’s estimator tool helps borrowers calculate exactly how much they will save on repayments.
When will the 20 per cent HECS reduction happen?
The Australian Taxation Office began applying the 20 percent reduction to higher education debt balances in mid-November, with most cuts expected to be completed by mid-December.
Mr Clare said Australians with a student debt did not have to do anything to claim the benefit, and that it would be automatically applied to the debt amount at June 1.
“They don’t have to do a thing, just wait for that ding, wait for that text message or email and then you’ll know that it’s happened,” he said.
Nearly all reductions will be applied before Christmas and will be backdated to June 1, 2025, prior to any indexation.
The Government introduced this measure to ease the cost of living pressures facing Australians. It aims to help borrowers pay off their loans sooner while providing immediate financial relief for millions.
This sweeping reform follows recent changes to make indexation more equitable and increases the minimum repayment threshold from $54,435 in 2024-25 to $67,000 in 2025-26, reducing compulsory repayments for many.
This initiative forms part of the federal budget’s broader cost-of-living support measures to assist Australians through challenging economic times.
