Bill to reduce student debt now law

Legislation has recently been enacted which delivers on the 2025/26 Federal Budget announcement to reduce student debts.

Pursuant to this legislation:

• there is a one-off 20% reduction to Higher Education Loan Program debts and other student loans that were incurred on or before 1 June 2025;
• the minimum repayment threshold is increased from $54,435 in the 2024/25 income year to $67,000 in the 2025/26 income year (to continue to increase each year with the growth in wages); and
• a marginal repayment system is introduced where compulsory student loan repayments are calculated only on income above the new $67,000 threshold (rather than having it based on a percentage of the repayment income).

Please note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information's applicability to their particular circumstances.