Case Studies

How Australia is Reducing Student Loan Burdens: 20% Cut to HELP and Other Training Debts

A recent announcement reduces HELP and other student loan debts by 20%, offering relief starting mid-2025; here’s what it means for borrowers and tax filings.

By NomadicTax Research Team • 5-8 min read • July 11, 2026

## What changed? Australia’s government has enacted a **20% reduction** for existing **study and training support debts**, like **HELP**, for debts that existed as of **1 June 2025**. The change is now law. Indexation will be recalculated on the reduced loan balance, and any excess indexation previously applied will be credited back to borrowers. ([ato.gov.au](https://www.ato.gov.au/api/public/content/0-736963d7-4616-49dd-bfbe-9dab124707a2?utm_source=openai)) ## Who it affects - People who have HELP, SSL, or equivalent debts outstanding on that date will benefit from the reduction. - If your compulsory repayment income for 2025-26 exceeds the repayment income threshold (currently $67,000), your repayment rate will apply only on the reduced debt. ([ato.gov.au](https://www.ato.gov.au/api/public/content/0-736963d7-4616-49dd-bfbe-9dab124707a2?utm_source=openai)) ## What borrowers should do - Don’t repay more than necessary—payments are automatically calculated on reduced debt. Employers withholding rates may be adjusted. Extra payments (voluntary repayments) still possible. - With your annual lodgments or any tax filings: check notices from ATO, and verify that balances, repayments, and indexation have been adjusted correctly. - Monitor any notifications from ATO when systems are updated. The reduction will be applied automatically; you don’t need to apply. ([ato.gov.au](https://www.ato.gov.au/api/public/content/0-736963d7-4616-49dd-bfbe-9dab124707a2?utm_source=openai)) ## Example calculations **Case 1:** John’s HELP debt was $30,000 on 1 June 2025. A 20% cut brings it to $24,000. If indexation added $500 between 1 June and processing, that $500 is re-calculated on the freshly reduced $24,000 balance. **Case 2:** Sarah’s compulsory repayment income is $80,000 for 2025-26. Repayment rate is 15% of portion of income exceeding $67,000. Under the reduction, that rate applies to the new debt balance (after the 20% cut), so repayments are lower. ## Implications for tax and beyond - Borrowers will have smaller repayment obligations and faster reduction of their debt burden. - Compulsory repayment withholding tables will update to reflect the new thresholds and debt balances. - Voluntary repayments and changes in employment arrangements (e.g. changing employers) may affect how withholding is handled. ## Key takeaways - The 20% cut to HELP and other training debts is automatic and in law—no applications needed. - Indexation recalculations may lead to refunds or reduced balances. - Borrowers should review their statements to ensure correct implementation. - This change offers relief to many with long-standing training loans.