One of the Albanese Government's biggest campaign promises was to reduce student debt. Specifically, the Labor Government said that HECS and HELP debt balances at 1 June would be reduced by 20 per cent.
But 1 June has been and gone, and many Australians are wondering where their debt reduction is. The good news is that the debt reduction has officially passed, and you might actually receive a text message confirming your reduction this week. Here's what you need to know.
Information about your reduction should start appearing via text
Both Prime Minister Anthony Albanese and Minister for Social Services Tanya Plibersek have confirmed via social media that the 20 per cent reduction to HECS and HELP debts have started rolling out.
In a post to Facebook, Albanese confirmed that people eligible for the scheme don't need to complete any forms and that the debt will reduct automatically. "No application, no forms. Just real cost of living relief. And keep an eye on your phone," he posted.
Plibersek similarly confirmed that the reduction will start taking place and those eligible will be notified by text within two weeks from 24 November 2025. "Remember to keep an eye out for a text message confirming your new balance. We’ve taken care of the rest," she said in a post on the social network formerly known as Twitter.
ICYMI: Across the next fortnight three million Aussies will see their student debt slashed by 20%. Remember to keep an eye out for a text message confirming your new balance. We’ve taken care of the rest. pic.twitter.com/E7y3WksOnw
— Tanya Plibersek (@tanya_plibersek) November 23, 2025
For now, keep an eye on your phone and wait for the text that prompts you to check your MyGov account. We should add, it is unwise to click on links sent via text message in case they are scams. Head to the website directly from a browser.
The cut didn't happen on 1 June because because the legislation hadn't been introduced – good news, it's official passed
The reason those of us with a HECS and HELP debt didn't see a reduction in their student loan balances earlier is because we had to wait for the legislation to be introduced to Parliament; and then be voted on.
So, although Labor had "promised" this change, it needed to be formally voted on first.
The debt reduction legislation was heard during 22-24 July and passed on 31 July
The student debt reduction policy was introduced during the 22 and 24 July sitting dates – these were the first sitting dates for the Australian Federal Parliament following Labor's 2025 election win. There were also sitting dates on 28-31 July. The policy finally passed on 31 July.
Debt balances won't be reduced instantly, it took a few months for the ATO to do the maths
Of course, the money couldn't appear back in your HECS & HELP accounts instantly. It took the tax office a few months to implement these changes. Prime Minister Albanese has previously said in a video that people with a student debt could see the reduction before the end of the year – this is the current timeline we have available.
Who does the cut apply to?
You don't need to do anything to receive this, it will happen automatically.
It's also important to know that the adjustments do not apply to Australians who are earning more than $180,000 annually.
The reduction applies to the full balance of your loan at 1 June 2025 – indexation will be recalculated based on the new balance
Despite the delay in the legislation being heard and the funds not arriving until later in 2025, the reduction will apply to whatever the balance of your loan was on 1 June this year.
The reduction will be applied to the balance before the indexation from the previous year is added, but will not include any of your repayments from the last financial year – to be clear, this is a good thing. It means you're getting the highest possible sum off your loan. Here's an example of how it will work:
Sally has $10,000 owing on her student debt on 1 June. This balance will be reduced by 20%, leaving her with a balance of $8,000. The indexation from the last year is 3.2%. As such, $256 is then added to the reduce balance of her loan on 1 June, leaving her with $8,256 owing.
Sally has a salary of $70,000 per year. She falls within the 2.5% HELP repayment bracket. Over the last financial year, Sally has a total of $1750 in student loan repayments held from her paycheque. She files her tax return on 1 August with no deductions. These $1750 of held repayments are applied to her student loan when her tax return is processed in August. The balance of her loan is now $6,506.
If you need more information on how HECS & HELP debts work in Australia, our guide to indexation and repayments can explain it all for you.
HECS repayments now start at a higher income threshold
The Labor Government has also made some adjustments to the payment thresholds to account for bracket creep. Australians used to start paying back their HECS debts once they earned $54,435 or more. Now the threshold has been moved to $67,000.
You will now pay 15 cents on any dollar earned over $67,000 and under $124,999 towards your debt. And it will be 17 cents for every dollar over $125,000.
What are people saying about it?
The education minister Jason Clare pointed out that the average Australian with a HECS or HELP debt would save $5,500. That is not an insignificant sum.
While many students welcome this move, critics say it doesn’t solve the deeper problems. Degree costs have been rising, and under previous policies, some courses (like arts) have become far more expensive. The Greens and student unions argue that this reform is a start – but they’re calling for much more, including wiping all student debt and making university free again.
In short, this reform gives welcome financial relief, but the bigger debate about how we fund higher education in Australia is far from over.
