How new HECS, student debt relief will work as millions of Aussies in for cash boost

Millions of Australians will have thousands of dollars slashed from their student debt after parliament passed new laws on Thursday. Here’s what you’ll get – and when.

The Albanese government’s signature HECS reforms passed parliament on Thursday, meaning more than three million Aussies will see thousands of dollars wiped from their student debt.

For those with an average debt of $27,600, it’s a saving of $5520.

The Bill also included changes to when the money needs to be repaid, saving those on lower incomes from mandatory deductions.

Here’s everything you need to know about the changes – and when they’ll come into effect.

About $16 billion will be slashed from the nation’s student loan debts. Picture: NewsWire / Nicholas Eagar

HOW MUCH WILL I SAVE?

The reforms will wipe about $16bn of HELP debt, VET loans and apprenticeship loans for approximately three million Australians.

According to calculations from the government someone with the average HELP debt of $27,600 will have $5520 wiped from their outstanding loans.

People at the upper end of debt, exceeding $60,000, could see a reduction of more than $12,000.

HOW DO I GET MY DEBT REDUCED?

Those with a debt don’t have to do a thing – the reduction will be automatically applied by the Australian Taxation Office (ATO).

Calculations will take into account the most recent indexation of debt, and will be backdated to the amount owed as of June 1, 2025, meaning you won’t be penalised for having paid off extra between then and now.

Changes will be implemented automatically, and Aussies will receive a text when the reduction has been applied.

WHEN WILL I GET MY MONEY?

Australians have been urged to be patient as the changes are implemented.

Education Minister Jason Clare said the ATO would need to “write about 50,000 lines of code to implement” the policy and “make sure that they get it right”.

He assured those with a debt that the passing of the legislation meant the changes were “guaranteed”, regardless of how long it took.

When the reduction has been applied, debt holders will receive a text notifying them.

WHAT ELSE HAS CHANGED?

Thursday’s Bill also contained measures to increase the minimum income repayment threshold – the amount you earn before repaying the loan becomes mandatory – from $54,000 to $67,000.

The amount to be repaid will now be calculated only on the income above the new $67,000 threshold, rather than on a person’s total annual income.

After the legislation has been signed off by the governor-general (receives royal assent), the new repayment schedule will take effect for the 2025-26 income year.

This is expected to take place within the next two weeks.

Originally published as How new HECS, student debt relief will work as millions of Aussies in for cash boost