Now lawSchools & Uni Introduced in the House of Representatives, 23 Jul 2025

Student debts were cut by 20% for 3 million people

This law took a fifth off uni loans and other student debts for about 3 million Australians. It also means you start paying back at a higher income, and only on the part of your pay above the cut-off.

Official name: Universities Accord (Cutting Student Debt by 20 Per Cent) Bill 2025

Who it affects

• People with a uni loan or other student debt: Your debt went down by 20% of what you owed on 1 June 2025.
• Graduates earning under $67,000: You pay nothing back from 2025-26. The old cut-off was $54,435.
• Graduates earning above $67,000: Your yearly payment is worked out only on the part of your pay above $67,000.
• Apprentices and trade course students with loans: Their loans get the same 20% cut and the same new payment rules.
• Future students: Debts taken on after 1 June 2025 do not get the 20% cut. The new payment rules still apply.

Student debts keep growing

Most Australians who go to uni pay with a government loan. Its full name is the Higher Education Loan Program. The government pays your fees. You pay it back through the tax system once you earn enough.

These debts grow a little every 1 June. The rise is linked to prices or wages. Student debts have grown a lot. About 70% of people paying back a uni debt are 35 or younger.

In 2024 a big review of uni study came out. It was called the Australian Universities Accord. It said high student debt adds to the cost of living. It said debt may put people off study. It also said the payment system hit low earners too hard.

Before the 2025 federal election, the government promised a 20% debt cut. It also promised fairer payments. The Minister for Education, Jason Clare, brought in this bill to do both.

A one-off 20% cut

Part 1 of the bill cuts student debts by 20%. It covers debts taken on up to and on 1 June 2025. The cut is made before the 1 June 2025 rise is added. So you also save the rise on that 20%.

It covers all uni loans, for both government places and full-fee places. In a government place, the government pays part of your fee. In a full-fee place, you pay all of it. It also covers loans for trade and work skills courses. It covers loans for apprentices, start-up loans for students, and some older student living loans.

Some loan payments should have gone through by 1 June 2025 but were late. If the delay was an office mistake, the debt still gets the cut.

The amount cut is added back to your borrowing limit. So the total you can borrow in your life stays the same.

Say you owed $30,000 before the 1 June 2025 rise. The law cuts that by $6,000, down to $24,000. The yearly rise is then worked out on the lower amount.

A higher repayment threshold

Part 2 changes the payments you must make. These are taken through your tax return once your income passes a set level.

That level goes up from $54,435 in 2024-25 to $67,000 in 2025-26. It will keep going up each year in line with wages. If you earn $67,000 or less, you do not have to pay anything back.

Repay only above the threshold

Under the old rules, once you passed the cut-off you paid a share of your whole income. A small pay rise could push you into a much bigger payment.

Now you only pay on the part of your income above the cut-off. You pay 15% of income between $67,000 and $125,000. You pay 17% of any income above $125,000.

Say you earn $80,000 in 2025-26. That is $13,000 over the cut-off. You must pay back 15% of $13,000. That is $1,950.

The review said this would ease the load on low earners. It said it would stop the rules putting people off working more hours. The same rules apply to the other student loans in this law.

You can still pay extra if you want to clear your debt faster.

Start date

The bill was brought into the House of Representatives on 23 July 2025. That is the house of Parliament where the government sits. The House passed it on 29 July 2025.

The Senate, the other house of Parliament, passed it on 31 July 2025. The Governor-General signed it into law on 2 August 2025. The Governor-General is the King's representative in Australia. It became Act No. 30 of 2025.

It started the day after it became law. The 20% cut applies to debts as they stood on 1 June 2025. The new payment rules apply from the 2025-26 tax year.

How they voted

Its journey through Parliament

Official sources

• Bill page on aph.gov.au
• Text of the bill
• Explanatory memorandum
• Bills Digest

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