The Australian government has overhauled the Higher Education Loan Program (HELP) to ease financial pressure on millions of graduates. Starting in the 2025–26 financial year, the system moved to a marginal repayment structure, meaning compulsory repayments are now calculated only on income exceeding a new, higher threshold of $67,000. Previously, repayments were based on a person's total income, which often resulted in larger deductions for those just crossing the threshold. This change is designed to ensure that graduates only make repayments when they have sufficient disposable income, effectively lowering the immediate financial burden for many early-career workers.
In addition to the new repayment method, the government implemented a one-off 20 per cent reduction to all student and training support debts that existed as of 1 June 2025. This measure, which removed approximately $16 billion in debt across the system, was a central component of the government's broader effort to address cost-of-living concerns. For many, this resulted in an immediate and significant drop in their total loan balance, providing a rare moment of relief for those managing long-term student debt.
Despite these changes, HELP debts continue to be indexed annually on 1 June to maintain their real value in line with inflation or the wage price index. While the government has capped indexation to ensure it never exceeds the lower of these two rates, the debt still grows each year. This ongoing indexation means that while monthly take-home pay may increase due to lower compulsory repayments, the total time taken to clear the loan may extend for some individuals. The system remains a complex balance between providing immediate relief and ensuring the long-term sustainability of the student loan program.