Sunita Somvanshi
Australians with student debt are set to receive up to $1,300 back in their annual pay packets as the new HECS/HELP repayment system takes effect from September 24, 2025. The reforms raise the minimum repayment threshold to $67,000, meaning anyone earning below this amount will no longer make compulsory repayments, while those above the threshold will benefit from a simplified marginal rate system.
Cash Boost Hits Bank Accounts
The government says most borrowers will see up to about $50 extra per fortnight in take-home pay, according to ATO and Department of Education examples. The Treasurer has emphasized the measure is aimed at easing financial pressure on young Australians.
Education Minister Jason Clare stated in an official release: “For someone earning $70,000 a year, it will cut the amount they have to repay every year by $1,300.” He added that the changes are about “putting money back in the pockets of young people” alongside the 20% debt reduction that’s been legislated.
The changes affect over 3 million Australians with HELP debt and remove more than $16 billion in student loan obligations, according to official Department of Education figures.
What’s Changed in Your Pocket
The government has simplified the system from 19 brackets to just four ranges:
- No repayment required for incomes below $67,000
- 15 cents per dollar on income above $67,000 up to $125,000
- $8,700 plus 17 cents per dollar on income above $125,000 up to $179,285
- 10% of total income for those earning $179,286 or more
On top of this, a one-off 20% reduction applies to loan balances as they stood on 1 June 2025 (before indexation). The ATO will apply this automatically and notify borrowers when processed.
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Dollar Difference for Workers
The impact varies by income, with Australian Tax Office figures showing:
Someone earning $70,000 saves about $1,300 yearly, with around $50 more in each fortnightly pay.
A worker on $125,000 pays $8,700 annually, saving approximately $675 compared to previous rates when using the 2024-25 table (where the rate was 7.5% of total income for the $119,310–$126,467 band).
The average HELP borrower (with debt of about $27,600) will see around $5,520 cut from their balance through the 20% reduction.
What You Need To Know
The ATO applies the 20% reduction in stages and will send notification when it’s processed. No action is needed – changes happen automatically.
Employers need to update payroll systems with new withholding rates from 24 September 2025. There’s no need to recalculate amounts already withheld between 1 July and 23 September 2025.
Australians living overseas must still report worldwide income and make HELP repayments when above the threshold.
If you made repayments after 1 June 2025, the 20% reduction still applies to your 1 June balance. Some who cleared loans after this date may receive credits or refunds.
System Background
The changes were enacted through the Universities Accord (Cutting Student Debt by 20%) Bill. HECS was introduced in 1989 as Australia’s income-contingent higher education repayment system, with HELP later consolidating these loan programs.
For more information, the ATO’s repayment page and Department of Education’s reduction FAQ page contain full details of the changes.
