Australian student debts to be cut by 20 per cent from by end of year
The Albanese government has made good on a key election promise.
Australians with student loans are set to have thousands of dollars wiped from their debts before the end of the year.
The Albanese government’s new HELP and HECS payment reshuffle came into effect on Wednesday, cutting student debt by 20 per cent.
The Australian Taxation Office (ATO) will begin to erase the amount from student debts as they stood on June 1.
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By continuing you agree to our Terms and Privacy Policy.Most reductions will be applied at the end of the calendar year, however, some complex cases may not be completed until early 2026, the ATO said.
The Department of Education announced it would wipe more than $16 billion in debt for more than three million Australians.
“We promised cutting student debt would be the first thing we did back in parliament — and that’s exactly what we’ve done,” Prime Minister Anthony Albanese said when announcing the cut in July.
“Getting an education shouldn’t mean a lifetime of debt.”
The government said the cut will “lift the burden for Australians with a student debt”.
This includes students on HELP, Vocational Education and Training (VET) student loans, Australian Apprenticeship Support Loans, Student Startup Loans, and other student loans.
HECS repayments are taken from a person’s pay one they earn more than an income threshold — which has now also risen from $54,435 to $67,000.
For someone earning about $70,000 a year, the changes will reduce minimum repayments by $1300 per year.
The average student debt is about $27,600, meaning $5520 of the total amount will be wiped from their loan.
However, the money is not immediately taken off the HECS debt and is instead deducted as a lump sum at the end of the financial year after indexation has been applied on June 1.
This means a higher debt is indexed as the repayments have not been deducted.
A report by the Australian Universities Accord to the Department of Education recommended the process needs to be reformed to make the system fairer.
They also made 47 other recommendations to reform the sector.
An Australian Tertiary Education Commission has been established in an interim capacity to implement long-term university reform and will review the HECS system over the next 12 months.
— With AAP
Originally published on 7NEWS
