Australians with student debt will begin saving thousands of dollars from today as new HECS and HELP repayment rules take effect.

The government’s legislation, passed in July, reduces student debt by 20 percent and applies retrospectively from 1st of June 2025, before indexation. Education Minister Jason Clare explained that the Australian Taxation Office (ATO) had to update its systems, including writing around 50,000 lines of code, to implement the changes.

Graduates earning approximately $70,000 a year will save about $50 per fortnight, totaling roughly $1,300 annually. The minimum income threshold to start repaying loans has increased from $54,435 to $67,000. Around three million Australians are set to benefit, with the average debt of $27,600 reduced by $5,520.

The ATO will automatically apply the 20 percent reduction and adjust any prior indexation, so individuals do not need to take action. Australians will be notified via myGov when the changes are implemented. Repayments already made during the year will count toward the adjusted debt. CPA Australia advised avoiding financial advice from social media influencers, emphasizing that lodging tax returns is legally required and essential for accurate debt assessment.

Once a HECS or HELP debt is fully repaid, compulsory deductions from pay will stop, but employees must inform their employer via a “withholding declaration” form. This ensures paychecks reflect the change. The repayment rate, which increases with income, is now adjusted so that Australians earning below $67,000 are not required to make compulsory repayments, though voluntary contributions remain optional. Any overpayments from previous financial years will be refunded when individuals lodge their tax return.