Reduction of HELP debts (March 2025 Federal Budget Update)

Published on 26 March 2025 by Drew Pflaum
Categories: Government Budgets

As announced in its mid-year economic and fiscal outlook (MYEFO), the Budget confirms that the Government intends to make changes that will reduce Higher Education Loan Program (HELP) and other student debts for more than three million Australians by around $19 billion. The measure will reduce outstanding student debts by 20% before indexation is applied on 1 June 2025 (subject to the passage of legislation) which will remove $16 billion in debt.

The Government has also confirmed it will commit $182.2 million over four years from 2024–2025 (and $402.3 million from 2028–2029 to 2034–2025) to reform the repayment system for the HELP and other student loan schemes. The reform will deliver a fairer student loan repayment system that is based on marginal rates and will increase the amount individuals can earn before they are required to start repaying their loan. It will take effect from 1 July 2025, subject to the passage of legislation.

The Government has already legislated a cap on HELP indexation based on the lower of the Consumer Price Index (CPI) or the Wage Price Index (WPI). That change was backdated to 1 June 2023, and has already reduced outstanding student debt by around $3 billion, according to the Government.