The Federal Government’s commitment to reduce student loan debts by 20% has now been legislated, providing significant relief to over three million Australians with outstanding education debts.


Who is eligible?


The reduction applies to all student loan types, including:

  • HELP debts (HECS-HELP, FEE-HELP, OS-HELP, SA-HELP),
  • VET Student Loans,
  • Australian Apprenticeship Support Loans, and
  • legacy schemes such as the Student Financial Supplement Scheme.

To be eligible, you must have had a student loan balance outstanding on 1 June 2025. The 20% reduction will be calculated on your balance as at that date, prior to the application of annual indexation.

How the reduction works

  • If you made repayments after 1 June 2025, you will still benefit from the reduction based on your original balance at 1 June.
  • If you have fully repaid your loan since 1 June, the reduction may result in a credit on your ATO account. This could generate a refund to your nominated bank account (provided you have no other outstanding tax liabilities).
  • If your loan was already paid off before 1 June 2025, you will not be eligible for the reduction.

What you need to do

  • No action is required – the ATO will automatically apply the 20% reduction.
  • The adjustment is expected to be processed by the end of 2025, and you will be notified once it has been applied. You can view your updated balance via myGov or the ATO app.
  • Do not delay lodging your tax return while waiting for your loan balance to be updated. Your tax obligations remain unchanged.
  • Ensure your bank details are up to date with the ATO if you are expecting a potential refund.
  • If your loan is fully paid as a result of the reduction, notify your employer so that they cease making additional compulsory repayments from your salary.

Key takeaway

This one-off 20% reduction offers meaningful relief for Australians managing student debt, but the adjustment is based strictly on loan balances as at 1 June 2025. Staying across your ATO account details and ensuring your records are up to date will help you take full advantage of this change. DFV are here to help with this, so if you have any questions contact us today.

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