Compulsory repayment changes
The following changes to compulsory repayments are now law and take effect from 1 July 2025.
- The minimum repayment income needed to make a compulsory repayment has increased to $67,000 (from $54,435 in 2024–25).
- Compulsory repayments have moved to a marginal repayment system and are only calculated on the income above $67,000 (instead of the total repayment income).
- Rates for the 2025–26 income year will be:
- 15 cents for every dollar of your repayment income that exceeds $67,000 up to $125,000
- $8700 plus 17 cents for every dollar of your repayment income that exceeds $125,000 up to $179,285
- 10% of your total repayment income if it is $179,286 or more.
If your repayment income is $179,286 or more, your compulsory repayment will continue to be 10% of your total repayment income. This is to ensure you are not worse off because of the shift to marginal rates.
These rates and thresholds will be indexed each year in line with the Consumer Price Index (CPI).
What do these changes mean for study loan holders?
Depending on your income:
- most people will make a smaller compulsory repayment towards their loan debt from their 2026 tax return onwards
- some people will no longer need to make a compulsory repayment as their repayment income is $67,000 or less
- people earning $179,286 or more will be no worse off.
You can get an estimate of your new compulsory repayment on the Department of Education's Reduction and repayment estimatorExternal Link.
The tax you pay throughout the year can include an amount towards your compulsory repayment. As a result of these changes, you may pay less tax throughout the year.
If you're an employee:
- you may have less tax withheld from your pay towards a compulsory repayment after the changes have been made
- we are working to update the tax tables your employer uses with the new changes
- any additional amounts already withheld may be refunded to you when you lodge your 2026 tax return – if you have no outstanding tax or other government debts.
Example: compulsory repayment change
Grace has a HELP debt and will have a repayment income of $80,000 in 2025–26 from one employer.
Before the changes to repayments, Grace’s compulsory repayment would have been $2,800 (or 3.5% of her total $80,000 repayment income).
After the law change, Grace pays 15% of her 2025–26 repayment income that exceeds $67,000 (the minimum repayment income for that year). This means her compulsory repayment is $1,950 (15% of $13,000).
Grace told her employer about her study loan. Grace's employer is now using the updated tax tables after the law change and is withholding less tax from Grace's pay.
Grace is paid fortnightly, so she will get around $32 extra each pay, that is: ($2,800 - $1,950) divided by 26 pays in the financial year.
End of exampleIf you pay your tax in instalments:
- these changes will not be applied until 1 July 2026
- you'll receive any extra tax you paid in the 2025–26 income year in your 2026 tax assessment – if you have no outstanding tax or other government debts
- you may want to vary your 2025–26 instalments to accommodate a lower compulsory repayment - see How to vary your PAYG instalments.
Don’t forget – you can still make voluntary repayments at any time to reduce your debt.
20% loan reduction
The 20% reduction to all study and training support loans that existed on 1 June 2025, is now law.
- The reduction will be backdated to your loan as at 1 June 2025, before indexation was applied.
- Indexation will be re-calculated on the reduced loan amount, and any excess indexation credited back to your loan.
We will start processing reductions once our systems are set up to deliver these changes. You don't need to do anything for the reduction to be applied. We will notify you when we have applied the 20% reduction to your loan account.
The 20% reduction will be rolled-out in stages, and we expect most reductions will be applied before the end of the calendar year. Some complex cases may not be completed until early 2026. We'll provide more information about these stages soon.
You should lodge your 2025 tax return as normal. There is no benefit in delaying lodgement as the reduction is based on your loan balance as at 1 June 2025.
To get an idea of what your 20% reduction will be, see the HELP debt reduction and repayment estimatorExternal Link on the Department of Education website. This estimator can be used for other types of loans as well.
For more information on how to view or manage your study and training loan balance, visit View your loan account online.
Refunds
Where your study loan is in credit after the reduction, you may receive a refund for the excess amount to your nominated bank account – if you have no outstanding tax or other government debts.
To avoid any delays if you're expecting a refund after the 20% reduction, check your bank details are up to date with us or your registered tax agent. If you used a tax agent to lodge your most recent tax return, it's likely their bank details will still be on your account. You can view or update your current nominated bank account using ATO online services or the ATO app.
Refunds will be processed separately to the reduction, so there will be a delay between seeing a credit on your loan account and a refund issuing.
Indexation rate calculation change
The indexation rate for study and training loans is now based on the Consumer Price Index (CPI) or Wage Price Index (WPI) – whichever is lower.
This change was backdated to indexation applied from 1 June 2023 for all study or training support loan accounts. Indexation rates for 2023 and 2024 changed to:
- 3.2% for 1 June 2023 (reduced from 7.1%)
- 4% for 1 June 2024 (reduced from 4.7%).
We have processed recredits for 2023 and 2024 indexation rate changes as well as any relevant refunds where study loans were in credit after the adjustment. You can view your loan account online.
If some or all your indexation was waived in 2023 or 2024, you would have only received a recredit on the indexation that was not waived. We applied the full indexation recredit to your account, and then applied a separate transaction to correct the amount.
Trade Support Loan name change
From 1 January 2024, a Trade Support Loan (TSL) is known as an Australian Apprenticeship Support Loan (AASL)External Link.
The name change was included in the Trade Support Loans Amendment Act 2023External Link that amends the Australian Apprenticeship Support Loans Act 2014External Link. It received Royal Assent in August 2023. This brought changes to the existing TSL program (which was introduced in 2014).
The TSL program provided income-contingent loans to eligible apprentices to help with everyday costs while completing their apprenticeships. The AASL program expands access to these loans to a broader range of apprentices and trainees, including non-trade occupations. A new Australian Apprenticeship Priority List replaces the TSL Priority List.
Early childhood, aged care and disability are examples of sectors that may benefit from this expansion.
For more information, see Department of Employment and Workplace Relations - Australian Apprenticeship Support LoansExternal Link.