On 23 July, the Labor government introduced legislation aimed at enacting its election promise to reduce student debt by 20%.
The Bill proposes to:
- provide a one-off 20% reduction to Higher Education Loan Program (HELP) debts and certain other student loans that are incurred on or before 1 June 2025;
- increase the minimum repayment threshold from $54,435 in 2024–2025 to $67,000 in 2025–2026; and
- introduce a marginal repayment system where compulsory student loan repayments are calculated only on income above the new $67,000 threshold rather than having it based on a percentage of the repayment income.
This complements measures enacted in the last Parliament which cap the level of indexation of student loans to the lower amount of either the consumer price index (CPI) or the wage price index (WPI). This is designed to ensure that loans will never be indexed by more than wages growth. Accordingly, the new threshold of $67,000 will be indexed for 2026–2027 and following years, but will never be increased by a rate exceeding wages growth.
