20% debt reduction
We have commenced reducing all student and training support debts by 20% that existed on 1 June 2025. If you have multiple eligible student debts, each account will receive a 20% reduction.
What is happening?
The 20% reduction is applied to your student debt balance as at 1 June 2025, before indexation was applied. The 2025 indexation will be recalculated on the reduced debt amount.
You don’t need to do anything to get the reduction. Most people will get their reduction before the end of 2025, however more complex reductions may not be processed until early 2026.
We'll notify you when we've applied the 20% reduction to your student debt. The notification will be sent via SMS, email or your myGov Inbox. To make sure you get the notification, check your contact details are up to date.
You can view your loan account using the ATO app or ATO online services. Find out what you can expect to see on your account at View your study loan account online.
Remember to lodge your 2025 tax return as normal. There is no benefit in delaying lodgment as the reduction is based on your debt balance as at 1 June 2025.
Study loan refunds
Where your study loan account is in credit after the 20% reduction, you may receive a refund. If you have outstanding tax or other Commonwealth debts, we will apply your credit to these debts first.
You don't need to phone us to get your refund. Refunds are processed separate to the 20% reduction, and most will be processed by January 2026. You won't be notified when your refund is processed.
Your refund will be sent to your nominated bank account. If you're expecting a refund, make sure your bank details are up to date with us to avoid any delays. You can view or update your current nominated bank account using the ATO app or ATO online services. If your tax agent's account is listed as your nominated bank account, they'll send your refund to you. Contact your tax agent if you have any questions.
If you made a compulsory repayment after 1 June 2025, we'll refund your study loan credit by amending your tax return to adjust your assessed compulsory repayment. You'll also receive a notice of amended assessment.
Once your refund is processed, it takes 3 business days before the amount will be sent to your nominated bank account. Also allow for bank processing timeframes, which can vary.
Compulsory repayment changes
The following changes to compulsory repayments for student and training support debts are in effect from 1 July 2025:
- The minimum repayment income needed to make a compulsory repayment has increased to $67,000 for the 2025–26 income year (from $54,435 in 2024–25).
- Compulsory repayments have moved to a marginal repayment system. This means they are only calculated on the income above $67,000 (instead of the total repayment income). See the latest Study and training loan repayment thresholds and rates.
- If your repayment income is $179,286 or more, your compulsory repayment will continue to be 10% of your total repayment income. This means you won't be worse off because of the shift to marginal rates.
These rates and thresholds will be indexed each year in line with average weekly earnings.
Compulsory repayment estimate
You can get an estimate of your new compulsory repayment on the Department of Education's Reduction and repayment estimatorExternal Link.
Our Study and training loan repayment calculator will not be updated with these changes until 1 July 2026. Before then, it may estimate your 2025–26 compulsory repayment amount incorrectly because it is using the old thresholds and rates.
What the changes mean for study loan holders
Depending on your income:
- Most people's compulsory repayments will be lower 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.
- There is no change for people earning $179,286 or more.
The tax withheld from your pay throughout the year can include an amount towards your compulsory repayment. As a result of these changes, if you're an employee:
- you may have less tax withheld from your pay towards a compulsory repayment
- 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 Commonwealth debts.
Example: compulsory repayment change
Grace has a HELP debt. She has one employer and has a repayment income of $80,000 in the 2025–26 income year.
Before the law change, Grace’s compulsory repayment would have been $2,800 (or 3.5% of her total $80,000 repayment income).
Now, Grace pays 15% of her 2025–26 repayment income above $67,000 (the minimum repayment income for that year). This means her compulsory repayment is $1,950 (15% of $13,000).
Grace's employer is aware of her study loan. They are now using the updated tax tables and withholding less tax from Grace's pay.
Grace is paid fortnightly, so she gets around $32 extra each pay (calculated as ($2,800 − $1,950) ÷ 26).
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 Commonwealth debts
- you may want to vary your instalments in 2025–26 to accommodate a lower compulsory repayment. You can get advice from a registered tax agent on whether you should vary your instalments.
Don’t forget – you can still make voluntary repayments at any time to reduce your debt.