The Australian Government has announced it is making the repayment system for the Higher Education Loan Program (HELP) and other student loans fairer by increasing the amount people can earn before they are required to start repaying their loan, and by moving to a system of HELP repayments based on marginal rates. From 1 July 2025 the student debt repayment threshold will change. Students and workers with an outstanding student loan debt will only be required to make compulsory repayments once they start earning an annual salary of $67,000. This is an increase from the current repayment threshold of $54,435 in 2024-25.
Individuals will be able to earn more before they need to start making compulsory repayments and the size of repayments will be less. People with low incomes will benefit most from these changes.
The proposed repayment changes build on the improvements currently underway to help reform the higher education sector recommended in the Australian Universities Accord including:
- capping the HELP debt indexation rate
- introduction of paid Prac payments
- expanding Fee-Free Uni Ready Courses
- increasing the number of University Study Hubs
- introducing a new managed growth and needs-based funding model for universities.
The new reforms are subject to the passage of legislation.