The Australian government has implemented a significant overhaul of the Higher Education Loan Program, commonly known as HELP, aimed at easing the financial burden on millions of students and graduates. The centerpiece of these reforms is a one-off 20 per cent reduction in student debt, which was applied to balances existing as of June 1, 2025. This measure, which removed over $16 billion in debt, was designed to provide immediate cost-of-living relief to more than three million Australians, the majority of whom are aged 35 or younger.
Beyond the debt wipe, the government has fundamentally changed how compulsory repayments are calculated. Starting in the 2025–26 financial year, the minimum income threshold for repayments was raised to $67,000. Furthermore, the system shifted to a marginal repayment model, meaning compulsory contributions are now calculated only on income earned above that threshold, rather than on a person's total annual income. These changes are intended to ensure that repayments are more affordable and better aligned with a graduate's actual capacity to pay.
These reforms follow earlier adjustments to the indexation process, which previously saw student debts grow in line with the Consumer Price Index. To prevent debts from ballooning during periods of high inflation, the government now caps indexation at the lower of either the Consumer Price Index or the Wage Price Index. This ensures that student loan balances do not grow faster than the average growth in wages, providing more predictability for those managing long-term debt.
Despite these changes, the annual indexation process remains a point of contention. Because indexation is applied on June 1 each year, it often occurs before the compulsory repayments withheld from a graduate's salary throughout the year are fully credited to their account. This timing mismatch means that some graduates see their debt balance increase due to indexation on a portion of the loan that they have effectively already paid off, leading to calls for further reform to the timing of these adjustments.