If you have a Higher Education Loan Program (HELP) debt, you may be in for some good news! The Australian Government has proposed significant changes that could reduce your repayments and lower your debt – if the legislation passes. These updates are expected to take effect by 1 June 2025, and here’s how they could impact you:

1. A One-Off 20% HELP Debt Reduction

The ATO will automatically apply a 20% reduction to all HELP debts before indexation on 1st June 2025. For example, if you have a HELP balance of $27,600, you could see a reduction of $5,520—instantly lowering your debt!

2. Higher Repayment Thresholds – Keep More of Your Income

From 1st July 2025, the minimum income required to start repaying your HELP debt will increase from $54,435 to $67,000. This means you won’t need to make repayments unless you earn above $67,000. The new marginal repayment rates are:

• Below $67,000 – No repayments required.
• Between $67,001 and $124,999 – 15 cents per dollar over $67,000.
• Above $125,000 – $8,700 + 17 cents per dollar over $125,000.

3. HELP Indexation Cap – Lower Growth on Your Debt

Under the proposed changes, HELP indexation will be capped at the lower of the Consumer Price Index (CPI) or Wage Price Index (WPI). This will be backdated to 1st June 2023, meaning if your HELP debt increased due to indexation in 2023 or 2024, the ATO may adjust your balance—and you could even receive a refund if over-indexed!

Get Expert Advice

Want to know how these changes could affect your financial future? The team at SCM Financial Group can help you navigate your options and plan effectively. Get in touch with us today!

Ian Bennet – Partner and Principal, SCM Accounting & Advisory