Student loans debt update
If you’re among the more than three million Australians with a student loan, there’s welcome news
.
The government’s legislation to reduce student loan debt by 20% is now being applied on debt balance as at 1 June 2025, before indexation was applied, with the 2025 indexation recalculated on the reduced debt amount.
Most people were due to receive their reduction before the end of 2025, and more complex reductions are being processed by the ATO in early 2026. The ATO will notify you via SMS, email or your myGov inbox when your reduction has been applied.
If your loan account’s in credit after the reduction is applied, you may receive a refund – although, if you have outstanding tax or other Commonwealth debts, the ATO will apply your credit to these debts first.
An additional change is that compulsory repayments have also moved to a marginal repayment system. Repayments are calculated on the part of your income above starting limit of $67,000 (instead of your total repayment income).
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