20 per cent HECS debt cut locked in for mid-November – see how much you’re set to save

Most of the 3m Australian HECS debt holders will see their student loans slashed by the end of the month. And that’s not the only Christmas present slicing uni debt repayments ...

Australian HECS debt holders will have noticed their pesky student debt was unchanged when they did their most recent tax return.

But that debt is finally set to be slashed by 20 per cent in line with the Albanese government’s student debt cut promised at the last election.

Education Minister Jason Clare’s office said about 50 per cent of Australians with a uni debt began to see the ATO cut the outstanding amount by one-fifth at the end of November – and all those remaining should see the debt cut come through by mid-January.

This policy affects the over 3m Australians who carry a student debt, often called a HECS or HELP loan.

Mr Clare’s office said the cut will be backdated to balances on June 1, before indexation occurred.

The cut will occur automatically and debt-holders will be notified by text message or email when it happens.

For someone with the average debt of $27,600, this will see $5520 wiped from their outstanding HELP loans.

“We promised we would cut your student debt by 20 per cent and we are delivering,” Mr Clare said.

“This is a big deal for three million Australians.

“This cut is already locked in to people’s balances at June 1 but soon they will be able to see it and feel it. Just out of uni, just getting started, this is taking a weight off their back.”

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The Albanese government announced further changes to HECS repayments in September, including lifting the minimum threshold for repayments from $56,156 to $67,000.

This change means lower income earners do not have to pay back their debt until they start earning more, with someone on $70,000 a year saving $50 a fortnight in repayments.

The 20 per cent student debt cut was a big election promise by the Labor government. Picture: NewsWire / Martin Ollman

By design student debts are interest free, but do increase annually based on inflation (known as indexation).

So lifting the threshold can also extend the period and cost of student loans as repayments may dip below indexation, leading to what higher education policy Professor Andrew Norton described as a “debt treadmill”.

The $16bn student debt slash policy was ultimately supported by the Coalition, despite opposing it in the lead up to the 2025 federal election.

University debt holders are set to have their student loans cut by 20 per cent, and in most cases will also have their repayments reduced.

Independent ACT Senator David Pocock also supported the bill, but not before describing the 20 per cent cut as “populist policy”.

“The higher education system is no longer fair and populist policies like Labor’s pledge to wipe student debt by 20 per cent, while welcome, won’t fix the main issue which is the cost of some degrees and the new debt students are wracking up currently,” Mr Pocock said in April.

The policy was also criticised for being unfair to future students as it will have no impact on their potential student debts.