Compulsory repayment changes
The following changes to compulsory repayments for study and training support loans are now in effect from 1 July 2025:
- The minimum repayment income needed to make a compulsory repayment has increased to $67,000 (from $54,435 in 2024–25).
- Compulsory repayments have moved to a marginal repayment system. They are only calculated on income above $67,000 (instead of the total repayment income). See the latest Study and training loan repayment thresholds and rates.
If your repayment income is $179,286 or more, your compulsory repayment will continue to be 10% of your total repayment income. You will not be worse off because of the shift to marginal rates.
These rates and thresholds (other than $179,286) will be indexed each year in line with average weekly earnings.
Compulsory repayment estimate
You can get an estimate of your new compulsory repayment on the Department of Education's Reduction and repayment estimatorExternal Link.
Our Study and training loan repayment calculator will not be updated with these changes until 1 July 2026. Before then, it may estimate your 2025–26 compulsory repayment higher than your actual repayment amount because it is using the old repayment calculations.
What do these changes mean for study loan holders?
Depending on your income:
- most people will make a smaller compulsory repayment towards their loan debt from their 2026 tax return onwards
- some people will no longer need to make a compulsory repayment as their repayment income is $67,000 or less
- people earning $179,286 or more will be no worse off.
The tax you pay throughout the year can include an amount towards your compulsory repayment. As a result of these changes, you may pay less tax throughout the year.
If you're an employee:
- you may have less tax withheld from your pay towards a compulsory repayment
- any additional amounts already withheld may be refunded to you when you lodge your 2026 tax return – if you have no outstanding tax or other Commonwealth debts.
Example: compulsory repayment change
Grace has a HELP debt. She has one employer and has a repayment income of $80,000 in the 2025–26 income year.
Before the law change, Grace’s compulsory repayment would have been $2,800 (or 3.5% of her total $80,000 repayment income).
Now, Grace pays 15% of her 2025–26 repayment income above $67,000 (the minimum repayment income for the year). Her compulsory repayment for the 2025–26 income year is $1,950 (15% of $13,000).
Grace's employer is aware of her study loan. They are now using the updated tax tables and withholding less tax from Grace's pay.
Grace is paid fortnightly, so she gets around $32 extra each pay. That is, ($2,800 − $1,950) divided by 26 pays in the 2025–26 financial year.
End of exampleIf you pay your tax in instalments:
- these changes will not be applied until 1 July 2026
- you'll receive any extra tax you paid in the 2025–26 income year in your 2026 tax assessment – if you have no outstanding tax or other Commonwealth debts
- you may want to vary your 2025–26 instalments to accommodate a lower compulsory repayment – see How to vary your PAYG instalments. You can get advice from a registered tax agent on whether you should vary your instalments.
Don’t forget – you can still make voluntary repayments at any time to reduce your debt.
20% loan reduction
The 20% reduction to all study and training support loans that existed on 1 June 2025 is now law.
- The 20% reduction will be backdated to your loan as at 1 June 2025, before indexation was applied.
- Indexation will be re-calculated on the reduced loan amount, and any excess indexation credited back to your loan.
We'll start processing reductions once our systems are set up to deliver these changes. You don't need to phone us or do anything for the reduction to be applied. We will notify you when we have applied the 20% reduction to your loan account.
To make sure you're notified of your reduction:
The 20% reduction will be rolled-out in stages. We expect most reductions will be applied before the end of the 2025 calendar year. Some complex cases may not be completed until early 2026.
You should lodge your 2025 tax return as normal. There is no benefit in delaying lodgment as the reduction is based on your loan balance as at 1 June 2025.
To get an idea of what your 20% reduction will be, see the HELP debt reduction and repayment estimatorExternal Link on the Department of Education website. This estimator can be used for other types of loans as well.
For more information on how to view or manage your study and training loan balance, visit View your loan account online.
Refunds
Where your study loan is in credit after the reduction, you may receive a refund for the excess amount to your nominated bank account. That is if you have no outstanding tax or other Commonwealth debts.
To avoid any delays if you're expecting a refund after the 20% reduction, check your bank details are up to date with us or your registered tax agent. If you used a tax agent to lodge your most recent tax return, it's likely their bank details will still be on your account. You can view or update your current nominated bank account using ATO online services or the ATO app.
Refunds will be processed separately to the reduction. There will be a delay between seeing a credit on your loan account and a refund issuing.