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)
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)
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)
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.