The ATO has finished applying the one-off 20% reduction to every HELP and other student loan balance that existed on 1 June 2025, wiping about $5,520 off the average $27,600 debt. If you haven't checked your account, here's exactly what to look for.
Key facts
| What changed | Detail |
|---|---|
| Debt reduction | 20% one-off cut |
| Balance date used | 1 June 2025 |
| Average debt | $27,600 |
| Average cut | ≈ $5,520 |
| Legislation | Passed 2 August 2025 |
| Processing status | Complete as of 2026 |
What the 20% cut actually did
The Universities Accord (Cutting Student Debt by 20 Per Cent) Act 2025 became law on 2 August 2025, reducing every outstanding HELP, VET Student Loan and other study loan balance by 20%, calculated against the balance as it stood on 1 June 2025, before that year's indexation was applied. Because the reduction came first, 2025 indexation was then recalculated on the smaller post-cut amount, compounding the benefit slightly.
On the average $27,600 debt, the cut is worth roughly $5,520; a $40,000 balance dropped by $8,000, and a $15,000 balance by $3,000. More than three million Australians with study loans received a reduction. The measure passed alongside the repayment reforms that lifted the minimum threshold and introduced marginal rates, but the two operate independently: the cut changed what you owe, while the thresholds change how fast you repay it.
You didn't need to apply
The reduction was applied automatically by the ATO to every eligible account. There was no application form and nothing to opt into. Eligibility was determined entirely by whether your loan existed on 1 June 2025: debts fully repaid before that date missed out, and loans first drawn down after it were never in scope. Most reductions were processed before the end of 2025, with a small number of more complex accounts, such as those with recent transfers or multiple loan types, finalised into early 2026. The ATO has since confirmed processing is complete for all study and training support debts that existed on the qualifying date.
How to check it landed on your account
Log in to the ATO app or ATO online services through myGov and open “Tax > Study and training loans” to view your balance and transaction history. The reduction shows as a credit transaction dated against your 1 June 2025 balance. Look for it alongside that year's recalculated indexation entry and any compulsory repayments credited after your 2024-25 return was assessed. If you held more than one loan type, such as a HECS-HELP debt and a SA-HELP debt, the 20% applied across your combined study loan balances, so check each account listed. For a full breakdown of how your loan balance, indexation and repayments fit together, see our HECS-HELP guide.
If the balance looks wrong (the reduction is missing entirely, or the amount doesn't match 20% of what you owed on 1 June 2025), check the transaction dates first, since repayments credited after that date change the balance without affecting the cut. If it still doesn't reconcile, contact the ATO through myGov or by phone with your loan account details handy.
What this means for your pay
The 20% cut lowers your total loan balance, but it doesn't change your compulsory repayment rate or the STSL withheld from each payslip. Those are set by your income under the FY2026-27 thresholds, not your outstanding debt. The real effect shows up at the end: a smaller balance means fewer years of withholding before the debt clears, and less indexation added each 1 June along the way. Use our HECS-HELP calculator to see your current compulsory repayment against your reduced balance, and read our piece on your first tax return under the marginal system for what changes at assessment time.