IntelScoops

Canberra — July 31, 2025

In a landmark move aimed at easing financial strain on young Australians, the federal government has approved the cancellation of more than AUD 16 billion (USD 10.3 billion) in student debt. The decision, which took effect on June 1, 2025, will benefit over three million Australians holding Higher Education Loan Program (HELP) and related student loans.

The new policy includes a 20 percent reduction in the outstanding student loan balance as of June 1. This relief has been applied automatically and does not require any action from borrowers. Additionally, the government has increased the minimum repayment income threshold from AUD 54,435 to AUD 67,000 for the 2025–26 financial year.

Prime Minister Anthony Albanese described the measure as a major step toward restoring fairness in the education system. “No one should be burdened for life simply because they pursued a university degree. This relief gives people a fairer shot at building their future,” he said.

On average, borrowers are expected to see around AUD 5,500 wiped from their balances, with some individuals receiving reductions of more than AUD 12,000 depending on their loan size. Education Minister Jason Clare noted that the changes would also result in a significant reduction in annual repayment amounts for middle-income earners.

The legislation passed both houses of Parliament with wide support, including from the Greens and several independent senators. While the initiative has been praised as a meaningful step toward addressing the rising cost of living, some experts say further reforms are needed to tackle structural issues in Australia’s higher education funding model, such as fee inflation and loan indexation.

The student debt relief is part of a broader economic strategy by the government to alleviate household pressures amid rising living costs and interest rates. It follows months of lobbying by advocacy groups and economists who have argued that Australia’s student debt system had become unsustainable, particularly for younger generations.

With implementation now underway, the policy is expected to provide both immediate financial relief and long-term economic breathing room for millions of Australians navigating the country’s post-pandemic recovery.