title: 'HECS-HELP Debt in 2025: What the New Rules Actually Mean for Your Pay' meta_title: 'HECS/HELP Debt 2025 Repayment Changes: Thresholds & Marginal Rates' description: 'The government just wiped 20% off your HELP debt and changed how repayments work. Here's what it means for your actual pay packet—with real numbers.' author: 'The Thinkwiser' date: '2025-12-02' keywords: [ 'HECS debt 2025', 'HELP repayment 2025', 'student loan repayment', 'marginal rate', 'HECS debt reduction', 'HELP threshold', ] draft: false image: '/images/hecs-help-debt-2025.png' tags: ['Individuals', 'Tax Planning', 'Student Loans', 'Income & Tax'] category: 'Individuals' readingTime: '7'
HECS-HELP Debt in 2025: What the New Rules Actually Mean for Your Pay
If you've got a HELP debt sitting on your ATO account, you've probably heard the news: the government just wiped 20% of it. Gone. No application, no forms, no hoops.
But that's not the only change. The way repayments work has fundamentally shifted—and most people don't understand the new system yet. The old rule-of-thumb you learned as a graduate? It doesn't apply anymore.
Here's what's actually happening, who wins, who doesn't, and what it means for your pay packet.
The 20% Write-Off: Yes, It's Real
Let's start with the headline everyone's talking about.
If you had an outstanding HELP debt as of 1 June 2025, the government cut 20% of it. Automatically. No paperwork required.
According to the Department of Education, this applies to all outstanding HELP loans—HECS-HELP, FEE-HELP, SA-HELP, and OS-HELP. If you had multiple loan types, each one got the 20% reduction applied separately.
What does 20% actually look like?
| Original Debt | Amount Wiped |
|---|---|
| $30,000 | $6,000 |
| $50,000 | $10,000 |
| $80,000 | $16,000 |
| $100,000 | $20,000 |
That's real money. For many graduates, it's a year or more of repayments—just gone.
The catch: If you completely repaid your loan before 1 June 2025, you missed out. The reduction only applied to debt that existed on that snapshot date. If you made that final payment in May, the timing hurt.
The ATO has been processing these reductions throughout 2025, notifying borrowers via SMS, email, or myGov. If you haven't seen yours yet, check your myGov account.
This is genuinely generous policy. But it's a one-off. Don't expect another write-off. From here, you're back to paying through the normal system—which is where the bigger change comes in.
The Change Nobody's Talking About: Marginal Repayments
The 20% cut grabbed headlines. But the structural change to how repayments work will affect your salary for years to come.
How It Used to Work
Under the old rules, your HELP repayment kicked in when your income hit $54,435. Once you crossed that line, you paid a percentage of your entire income.
Earn $55,000? You'd pay a percentage of $55,000—not just the $565 above the threshold. Simple, but harsh on people who just barely crossed over.
How It Works Now
Starting 2025-26, HELP repayment moved to a marginal system. You only repay on income above $67,000.
Think of it like tax brackets. You don't pay income tax on your first $18,200. Similarly, you don't pay HELP repayments on your first $67,000.
This is a fundamental shift. If you earn $75,000, you only calculate repayment on the $8,000 above the threshold—not your full salary.
The New Repayment Rates
The ATO sets marginal repayment rates in brackets:
| Income Range | Repayment Rate |
|---|---|
| Below $67,000 | $0 |
| $67,000 – $125,000 | 15 cents per dollar above $67,000 |
| $125,000 – $179,286 | 17 cents per dollar above $125,000 |
| $179,286+ | 10% of total income |
Wait—that last row looks odd. If you earn over $179,286, you pay 10% of your entire income, not just the marginal portion. This cap was built in so high earners don't accidentally pay more under the new system than the old one.
The government thought of everything. Except making this easy to explain.
What This Actually Means: Real Numbers
Let's make this concrete.
Sarah: $75,000 salary
Old system: Income exceeds $54,435. Repayment = 6% of total income. $75,000 × 6% = $4,500 per year
New system: Only $8,000 is above the $67,000 threshold. $8,000 × 15% = $1,200 per year
Sarah saves: $3,300 per year. That's $275 per month back in her pocket.
James: $95,000 salary
Old system: $95,000 × 6% = $5,700 per year
New system: $28,000 above threshold × 15% = $4,200 per year
James saves: $1,500 per year. About $125 per month.
Maya: $55,000 salary
Old system: Just above the $54,435 threshold. Small repayment kicks in.
New system: Below $67,000 threshold. Repayment = $0
Maya saves: Everything she was paying. The threshold increase protects lower earners entirely.
David: $200,000 salary
Old system: $200,000 × 10% = $20,000 per year
New system: Income exceeds $179,286 cap. $200,000 × 10% = $20,000 per year
David saves: $0. The cap ensures high earners aren't worse off—but they don't benefit either.
Who Wins, Who Doesn't
Clear winners:
- Graduates earning $55,000–$100,000 — The threshold jump from $54,435 to $67,000 means many pay dramatically less or nothing at all
- Mid-career earners ($100,000–$179,000) — Still better off under marginal rates than the old system
- Everyone with a debt balance on 1 June 2025 — The 20% reduction is a genuine windfall
No change:
- High earners ($179,286+) — The cap protects them from paying more, but they don't gain from the new system
Actually hurt:
- Those who fully repaid before 1 June 2025 — No 20% reduction. If you made that final payment in May, the timing stings. There's nothing you can do about it now.
What About Indexation?
Your HELP debt grows each year through indexation—and that's separate from repayment.
Your debt is indexed annually using the lower of CPI or WPI. If inflation is high, your debt grows by that rate.
Here's the good news: The 20% reduction was applied before 2025 indexation. So the indexation that kicked in afterwards was calculated on your reduced balance, not the original.
That's a compounding benefit most people missed.
Key Dates
| Date | What Happens |
|---|---|
| 1 June 2025 | Snapshot date for 20% reduction. If you had a balance, it was cut. |
| 1 July 2025 | New marginal repayment system kicks in. Threshold rises to $67,000. |
| 30 June 2026 | Your first full tax year under the new system. Repayment calculated on your return. |
| Ongoing | Thresholds and rates indexed annually. |
What You Should Do Now
1. Check Your myGov Account
Log in, go to your ATO account, and verify the 20% reduction was applied. You should see a notification or an updated balance. If you haven't received anything by early 2026, contact the ATO.
2. Update Your Budget
If you earn between $67,000 and $179,286, your HELP repayment is dropping significantly. Don't let that money disappear into general spending. Redirect it to your emergency fund, offset account, or investments.
3. Reconsider Early Repayment
Before 2025, paying down HELP debt early made sense for some people—the interest is low, but it's still borrowed money.
Now? With lower marginal rates and a reduced balance, the calculus changes. If you earn under $125,000, you might be better off investing extra cash rather than rushing to clear your HELP debt. The opportunity cost of tying up money in early repayment is higher than it used to be.
4. Know What Counts as "Repayment Income"
"Repayment income" is broader than your salary. It includes employment, business, investment, and some government benefits. If you're self-employed or have significant investment income, review what counts and plan accordingly.
The Bottom Line
The 2025 HELP changes are broadly positive:
- A one-off 20% debt write-off
- A higher repayment threshold ($67,000 vs. $54,435)
- A marginal system that only calculates repayment on income above the threshold
For most graduates, this means real, ongoing relief—$100–$300 per month for many mid-career earners. That's money you can use to pay down a mortgage, invest, or simply breathe a little easier.
But don't assume anything. Check your myGov account to confirm the 20% reduction was applied. Run the numbers for your own income. The new system is fair, but your personal situation matters.
Your next step: Log into myGov, find your HELP balance, and see what 20% less looks like. Then decide what to do with the extra money in your pay packet—because it's yours now.
Sources & Further Reading
- ATO: Study and Training Loans – What's New
- ATO: Compulsory Repayment Thresholds and Rates
- Department of Education: 20% Reduction of Student Loan Debt
- Study Assist: Loan Increases and Indexation
Disclaimer: This article is for educational purposes only. For personalised advice on your specific HELP debt situation, consult a qualified financial adviser or accountant. Tax and student loan rules change—verify current thresholds with the ATO before making decisions.