What Has Changed?
- As of 1 July 2025, the minimum threshold for compulsory repayments rises from $54,435 to $67,000. (ato.gov.au)
- The repayment system has shifted to a marginal repayment model: instead of applying a single flat percentage on your total income, repayments are now calculated only on income above $67,000. (ato.gov.au)
- A 20% debt reduction was applied to all study and training support loans existing as of 1 June 2025, before indexation. (ato.gov.au)
- Indexation of your study loan debt will now be based on CPI or WPI—whichever is lower. (ato.gov.au)
Who Benefits Most
- Those with smaller debts or incomes just over the old threshold will see savings fast.
- Middle income earners (e.g. $80,000–$120,000) benefit significantly, as repayments are now only on income above $67,000, rather than on the full amount.
- Older students or those with long-term loans may benefit from the 20% reduction and from the lower indexation basis.
Practical Examples
- Grace, earning $80,000 in 2025–26: under old system she’d repay a flat percentage on full income; now she repays 15% only on the $13,000 above $67,000, i.e. $1,950, not the larger old amount. (ato.gov.au)
- If after the 20% reduction and lowered indexation, your loan is in credit (due to prior payments), you may receive a refund, provided you have no outstanding federal debts. (ato.gov.au)
What You Should Do Now
- Check your loan account: verify that your lender / ATO has correct bank details so refunds can be processed automatically. Updated account info can help. (ato.gov.au)
- Advise employees or clients: if PAYG withholding was adjusted or could be varied due to lower repayment obligations, talk to your payroll contact or an advisor.
- Lodge tax returns on time: Even though the 20% reduction is backdated, lodging your 2025 return as normal ensures you benefit. (ato.gov.au)
Compliance and Timing Insights
- The new rules (thresholds, marginal repayments, debt reductions) are now law. (ato.gov.au)
- The updates to PAYG withholding schedules will come later so that employers and agents can incorporate the changes. For some clients, this means more cash -- less being withheld upfront. (ato.gov.au)
- Note: instalment rates (for those paying by instalments) will only change from 2026-27. (ato.gov.au)
These changes lighten the financial load of many Australians with study debts. Plan ahead to take advantage, especially if your income or loan balance is close to key thresholds.