In a monumental financial relief measure, millions of Australians have woken up to significantly smaller student loan balances. A promised one-off 20 per cent cut to HECS-HELP debts has officially been applied, representing the largest student debt reduction in the nation's history.
Direct Relief for Borrowers
The Australian Tax Office has begun rolling out the changes, with 100,000 Australians receiving text message confirmations on Saturday alone. Over the next two weeks, more than three million people in total are expected to receive this financial boost. For someone carrying the average debt of $27,600, this translates to a $5,520 reduction in their outstanding balance.
Education Minister Jason Clare heralded the move, stating most people would see the cut applied before Christmas. "Today, 100,000 young Australians have got the best text message that they’ll ever get," he said. "They’ve got a message telling them that their HECS debt has been cut by 20 per cent."
A Historic Debt Wipe
The scale of this initiative is unprecedented. It's estimated that about $16 billion in student debt will be wiped from the national ledger. The reduction has been backdated to June 1, 2023, applying before this year's indexation occurred.
Recipients will be notified of the change via a text message or email from the ATO. They are encouraged to check their myGov accounts to view their new, lower loan balance.
Bipartisan Support for Cost-of-Living Relief
This one-off HECS debt reduction was a major Labor election commitment and was the first legislation introduced to the new parliament. The policy was confirmed when the federal opposition announced it would back the proposal in July.
Despite initially saying it would not support the measure during the campaign, the Coalition, through deputy leader Sussan Ley, agreed not to stand in the way. "We do care about students who are struggling with the cost of living, and I said we’d be positive where we can be and critical where we need to be," Ley stated at the time.
In addition to the debt cut, the new laws will also raise the income threshold for minimum HECS debt repayments, providing further ongoing relief for borrowers on lower incomes.
