Prime Minister Anthony Albanese has reaffirmed his commitment to reduce student debt, having initially campaigned on a plan to forgive $16 billion. Following Labor’s victory in the 2025 federal election, expectations are high regarding when these debt reductions will be implemented.
Starting July 1, the re-elected Albanese Labor government will introduce a significant 20 per cent cut to all student loan debts. In addition, they plan to raise the minimum income threshold for repayments from approximately $54,000 to $67,000. These measures are projected to result in around $16 billion being wiped off various income-contingent student loans, including Help, VET Student Loans, and Australian Apprenticeship Support Loans.
Graduates can expect an average reduction of about $5,520 from their HECS debts in 2025, based on the current average HELP debt of $27,600. Recent data indicates that this initiative will benefit states differently, with Victoria and New South Wales anticipated to receive the highest average per capita relief.
Furthermore, Australians who have fully repaid their student loans after 2023 or following 2024’s indexation will be eligible for refunds, provided they have no outstanding government debts. This new cut builds on previous debt reductions that began in December 2024, which amounted to approximately $3 billion and impacted around three million Australians.
The initial cuts were facilitated by changing the calculation method for debt indexation, ensuring that the indexation rate is capped at the lesser of either the Consumer Price Index (CPI) or the Wage Price Index (WPI). This change is designed to prevent future indexation from exceeding wage growth and was retroactively applied from June 1, 2023.
Albanese’s government has highlighted these debt relief measures as pivotal in transforming the educational landscape for millions of Australians. Education Minister Jason Clare noted the recent $3 billion debt wipeout as a precursor to the forthcoming reductions, stating that altogether, almost $20 billion in student debt will be forgiven. Clare emphasised that these changes will significantly improve conditions for over three million individuals.
Additionally, Assistant Minister for Education Anthony Chisholm reinforced the message that the government’s actions are aimed at creating a more equitable education system. The planned relief and adjustments to indexation represent major steps in their broader strategy to strengthen educational access and fairness across Australia.