What the HELP shake-up means for young Australians

Key Points

A one-off 20 per cent reduction was applied to all student loan debts existing on June 1, 2025.
The minimum income threshold for compulsory repayments was increased to $67,000.
A new marginal repayment system calculates debt payments only on income above the threshold.
Annual indexation is now capped at the lower of the Consumer Price Index or the Wage Price Index.

Background History

The HELP system, formerly known as HECS, provides government loans to students for higher education. Following high inflation in 2023 that led to a 7.1 per cent indexation spike, the government introduced these reforms to address cost-of-living pressures and improve fairness for younger Australians.

The Australian government has implemented significant reforms to the Higher Education Loan Program (HELP) in 2026, aimed at easing the financial burden on millions of students and graduates. The most prominent change is a one-off 20 per cent reduction applied to all student and training support debts that existed as of June 1, 2025. This measure, which has already been processed by the Australian Taxation Office, removed approximately $16 billion in debt from the accounts of roughly 3 million Australians. For many, this has provided immediate relief by lowering their total outstanding balance.

Beyond the debt reduction, the government has overhauled the repayment system to make it fairer for those in the early stages of their careers. Starting in the 2025-26 income year, the minimum income threshold required to begin making compulsory repayments was raised to $67,000. Additionally, the government introduced a marginal repayment system. Under this new structure, compulsory repayments are calculated only on the income earned above the $67,000 threshold, rather than on a person's total annual income. This change is designed to ensure that graduates only make repayments when they can afford to do so.

These reforms also address concerns regarding how student debt grows over time. The government previously announced that indexation—the annual adjustment to debt to account for inflation—would be capped at the lower of either the Consumer Price Index or the Wage Price Index. This ensures that student debt does not grow faster than the average wage. As of June 1, 2026, an indexation rate of 2.8 per cent was applied to remaining balances, marking the lowest rate since 2021.

While these changes provide substantial relief, the system remains a point of discussion for many young Australians. Some graduates continue to express frustration that their debt balances can still increase through annual indexation, even if they are not yet required to make repayments. As the new system settles, the government continues to monitor its impact on the financial wellbeing of young people, who make up the vast majority of those currently repaying student loans.