Australian student debts slashed by 20% from today
Australians with student loans will see thousands of dollars wiped from their debts starting today, as the Albanese government delivers on a key election promise.
The government’s new HELP and HECS payment reform came into effect on Wednesday, cutting student debt by 20 percent. The Australian Taxation Office will automatically apply the reduction to outstanding balances as of June 1, News.Az reports, citing foreign media.
The Department of Education said the change would erase more than $16 billion in debt for over three million Australians. “We promised cutting student debt would be the first thing we did back in parliament — and that’s exactly what we’ve done,” Prime Minister Anthony Albanese said when announcing the cut in July. “Getting an education shouldn’t mean a lifetime of debt.”
The measure applies to a range of student loans, including HELP, Vocational Education and Training (VET) student loans, Australian Apprenticeship Support Loans, and Student Startup Loans.
The government has also raised the income threshold for compulsory HECS repayments from $54,435 to $67,000. For someone earning around $70,000 a year, the changes will reduce minimum repayments by about $1,300 annually. With the average student debt sitting at $27,600, the reform will wipe roughly $5,520 from an individual’s loan.
However, the debt reduction is not applied immediately. It is deducted as a lump sum at the end of the financial year, after indexation on June 1. This means debts will still be indexed before the reduction is calculated, a process the Australian Universities Accord has recommended should be reformed.
An interim Australian Tertiary Education Commission has been set up to oversee long-term higher education reforms and will review the HECS system over the next 12 months.
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