Understanding the new 20% student loan reduction (October 25)

Relevant For:

Australian taxpayers with HELP, VSL or other student loans owing on 1 June 2025.

Key Points:

• A 20% cut applies to any student loan that existed on 1 June 2025, calculated on the balance before indexation.
• You qualify even if you have since made repayments or cleared the debt.
• If you paid the loan off after 1 June, the cut may create an ATO credit or refund if no other tax is owing.
• No benefit if your loan was fully repaid before 1 June 2025.
• The ATO will apply the change automatically and notify you.
• Lodge your tax return as normal and keep bank details current.

Full Article:

The government’s 20% reduction to student loan balances is now law. It applies to all student loan types, including HELP, VET Student Loans, Australian Apprenticeship Support Loans and older schemes such as the Student Financial Supplement Scheme.