On July 22, the federal Parliament returned for the first time since the election in May and passed legislation to cut student loan balances by 20 percent. The promise was made by the Albanese Labor government as part of its re-election pitch. At the same time, the debt repayment threshold will be raised, meaning students will only have to start repaying their loans when they start earning a salary of $67,000: up from $54,000. 

The Bill passed through the House of Representatives with Labor’s renewed majority and in the Senate by receiving support from the Coalition. This support from Sussan Ley is notable as former leader Peter Dutton opposed ‘HECS’ debt reductions in the recent federal election campaign. 

Although the government ran on reducing ‘HECS’ debts, the 20 percent cut applies to students’ entire ‘HELP’ balances, including any HECS-HELP, FEE-HELP, STARTUP-HELP, SA-HELP, OS-HELP, VET student loans, Apprenticeship Support Loans, Student Start-up Loans, and loans granted under the Student Financial Supplement Scheme.

While this support has meant relief will come as soon as possible, it has also allowed the government to bypass the opportunity for more distinct reforms in the legislation. 

In the Senate, the Greens proposed amendments that would remove debt indexation and reverse the Morrison Government’s Job Ready Graduates Scheme, which dramatically increased fees for humanities programs while reducing fees for STEM programs. However, as the bill had Coalition support, Labor didn’t need to negotiate these demands with the Greens, and the amendments lapsed. 

While it may take the ATO some time to process the cuts, any delays will not impact the amount of debt relief students receive, as the cuts are based on ‘HELP’ debt balances as they stood on June 1st, before the last indexation was applied.

The cut will not affect any course fees charged after June 1st 2025.

The debt relief will automatically be applied to students’ loans with no application or other manual work required.