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Australia Enacts 20% Student Debt Cut, ATO Prepares Roll-Out

The Australian Taxation Office is building new systems to deliver the 20% debt reduction automatically by year-end under revised repayment rules.

Overview

  • The law applies a one-off 20% reduction to HELP, VET and apprenticeship loans, cutting over A$16 billion for about 3 million borrowers.
  • New repayment rules lift the minimum threshold for compulsory repayments from A$54,435 to A$67,000 for the 2025–26 income year.
  • The Senate passed the bill by 36 votes to 3 with backing from Labor, the Greens and key crossbenchers; One Nation senators opposed the measure.
  • The ATO will automatically backdate cuts to the amount owed on June 1, 2025, and is coding systems to reflect new balances by year-end.
  • Following passage, the Greens and some independents have called for repeal of the Job-ready Graduates program and further higher education funding reforms.