If you have a Higher Education Loan Program (HELP) debt, you might be curious about how the government’s proposed changes to HELP loans could impact you. While these changes are still pending legislation, they are expected to come into effect by 1 June 2025.
One of the most notable changes is a one-time 20% reduction in all HELP debts. This reduction will be automatically applied by the Australian Taxation Office (ATO) before the annual indexation on 1 June 2025. For instance, if your HELP balance is $27,600, you could see a decrease of around $5,520 in your debt.
Starting 1 July 2025, the minimum income threshold for making compulsory HELP repayments is set to increase from $54,435 to $67,000. This means you will only begin repaying your HELP debt once your income exceeds $67,000. Repayments will be based on the income above this threshold, and the rates will be higher than the current system. The proposed new repayment rates are as follows:
- Income below $67,000: No repayment required
- Income between $67,001 and $124,999: 15 cents for each dollar over $67,000
- Income above $125,000: $8,700 plus 17 cents for each dollar over $125,000
Another key change is the proposed cap on the HELP indexation rate. Once the legislation is passed, the indexation rate will be set at the lower of either the consumer price index (CPI) or the wage price index (WPI). This adjustment will apply retroactively to all existing HELP, VET student loans, and similar accounts from 1 June 2023. If your HELP balance was indexed based on the CPI in 2023 and 2024, the ATO will adjust your account accordingly, potentially offering a refund if your balance falls below zero.
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