Legislation has recently been enacted to reduce student loan debts. In summary:

• there is a one-off 20% reduction to Higher Education Loan Program debts and other student loans that were incurred on or before 1 June 2025;
• the minimum repayment threshold is increased from $54,435 in the 2024/25 income year to $67,000 in the 2025/26 income year (to continue to increase each year with the growth in wages); and
• a marginal repayment system has been introduced where compulsory student loan repayments are calculated only on income above the new $67,000 threshold (rather than having it based on a percentage of the repayment income).

Notably, the ATO will apply the one-off 20% reduction, and individuals do not need to take any action.