The Australian Government has announced an important update concerning the compulsory repayment obligations for Commonwealth student loans. Commencing with the new financial year, the minimum income threshold at which individuals must start repaying their Higher Education Loan Program (HELP), Student Startup Loan, or ABSTUDY Student Startup Loan has been substantially increased. This change is designed to ease the financial pressure on lower and middle-income earners by ensuring repayments are only levied on income above the new, higher benchmark, and are calculated using a marginal system to make the process fairer.
Key details of the student loan repayment changes
- Effective Date: The new compulsory repayment rules came into effect on 1 July 2025, applying to the 2025–26 income year and for all subsequent tax times.
- New Repayment Threshold: The minimum repayment income (RI) threshold has been raised to $67,000.
- Previous Repayment Threshold: The threshold for the prior 2024–25 income year was $54,435 (for context).
- Affected Loans: These changes apply to all individuals holding an outstanding debt under the Higher Education Loan Program (HELP) (previously HECS), Student Start-up Loan (SSL), or ABSTUDY Student Start-up Loan (ABSTUDY SSL).
- Repayment Mechanism: Repayments are now calculated using a marginal rate, meaning the compulsory amount is only calculated on the portion of your repayment income that exceeds the $67,000 minimum threshold.
- Administrative Agencies: The loans are managed by Services Australia, while the compulsory repayments are collected via the income tax system by the Australian Taxation Office (ATO).
- Action Required: For individuals whose employer is aware of their loan, no direct action is needed as the employer will adjust Pay As You Go (PAYG) withholding.
- Source of Further Information: You can find more comprehensive details regarding the marginal repayment rates on the Australian Taxation Office website.
- ATO Contact Number: For complex tax enquiries regarding your debt, you may contact the ATO directly on 13 28 69.
- Announcement Date: This information was published by Services Australia on 15 October 2025.
Full explanation of the government announcement
The Australian Government’s decision to lift the compulsory repayment threshold for student loans is a significant move aimed at improving the financial sustainability of individuals who have accessed higher education and training. For many Australians, managing a loan repayment on top of general living expenses has been a challenge, especially at lower income brackets. By increasing the minimum income level to $67,000, the government is ensuring that those just entering the workforce or earning a modest salary are not burdened with compulsory repayments until their income is deemed sufficient. This measure primarily benefits those who are on the lower end of the income scale, allowing them to retain more of their take-home pay.
The key change is the shift to a marginal repayment system, which is a massive win for fairness. Previously, once your income hit the threshold, the entire compulsory repayment percentage was applied to your *total* repayment income. Now, it’s a much more targeted approach—repayments are only calculated on the part of your income that is *above* the $67,000 benchmark. For example, if you earn slightly above the threshold, you will only pay a small percentage on that difference, rather than on your whole income. This approach ensures a smoother and more gradual entry into the repayment system. This adjustment applies to all the main student support loans, including the Higher Education Loan Program (HELP), the Student Start-up Loan, and the ABSTUDY Student Start-up Loan, covering a vast number of Australians with these types of educational debts. The announcement was made by Services Australia, the agency responsible for delivering these student support services. You can read the original information about the new compulsory repayment rules for student loans directly from the source right here to ensure you have all the facts.
How to ensure you meet the new repayment requirements
The good news, mate, is that for most people, the process is largely automatic. However, to ensure you are meeting your obligations and benefiting from the new changes, here is what you can do:
Step 1: Advise Your Employer (If you haven’t already)
If you have a student loan and you are starting a new job, or if you have changed employers, you must tick the appropriate box on your Tax file number declaration form (NAT 3092). This informs your employer that they need to withhold the additional Pay As You Go (PAYG) amount from your wages.
Step 2: Check Your Payslip
Periodically review your payslip to confirm that your employer is withholding an amount for your loan, particularly if your repayment income is above the new $67,000 threshold. If your employer was aware of your loan before 1 July 2025, they should have automatically adjusted the amount withheld to reflect the new marginal rates.
Step 3: Monitor Your Repayment Income (RI)
Keep an eye on your estimated yearly income, especially if you have multiple jobs or significant investment income. Remember that your Repayment Income is more than just your taxable income—it includes factors like net investment losses, total reportable fringe benefits, and reportable super contributions.
Step 4: Lodge Your Tax Return
Your official compulsory repayment amount is only calculated by the ATO after you lodge your annual income tax return. The PAYG amounts withheld by your employer during the year will then be applied to cover this compulsory repayment. If too much was withheld, you will receive a refund; if not enough was withheld, you will have a gap to pay.
Step 5: Use the ATO Calculator
If you wish to calculate your exact expected repayment amount under the new marginal system, utilise the Study and Training Loan Repayment Calculator available on the Australian Taxation Office website.
To learn more about various government services and other important announcements, including those related to student support, feel free to check out the additional information available here.
Q&A on the new compulsory student loan repayment rules
- Q: What types of student loans are affected by the new $67,000 threshold?
A: The threshold applies to the Higher Education Loan Program (HELP), Student Start-up Loans (SSL), and ABSTUDY Student Start-up Loans (ABSTUDY SSL). - Q: When did this change officially start?
A: The new rules are effective from 1 July 2025, applying to the 2025–26 income year. - Q: Does the new threshold apply to old loans?
A: Yes, it applies to all existing and new loans for the compulsory repayment calculation from the 2025–26 income year onwards. - Q: Do I need to contact Services Australia or the ATO to update my details?
A: Generally, no. If your employer already withholds money for your loan, the adjustment to the new rate is automatic via the PAYG system. - Q: What is ‘Repayment Income’ (RI)?
A: RI is a comprehensive income figure used by the ATO. It includes your taxable income plus factors like total net investment loss, reportable fringe benefits, reportable super contributions, and exempt foreign employment income. - Q: What happens if I earn exactly $67,000?
A: If your Repayment Income is exactly $67,000, you will not have to make a compulsory repayment. Repayments only begin on income *above* this amount. - Q: How is the repayment rate calculated under the new rules?
A: Repayments are now calculated using marginal rates, meaning the percentage is only applied to the portion of your income that exceeds the $67,000 minimum threshold. - Q: Is there a maximum repayment rate?
A: Yes, the maximum compulsory repayment rate is for very high-income earners (e.g., $179,286 or more for 2025–26), where the rate is 10% of their total repayment income. - Q: What if I have two part-time jobs?
A: Your employer for each job only deducts PAYG based on the income they pay you. The ATO calculates your final compulsory repayment amount based on your *total* Repayment Income from all sources when you lodge your tax return. - Q: Will my employer automatically know I have a loan?
A: No. You must advise your employer by ticking the relevant box on your Tax file number declaration form when starting employment. - Q: I am still studying; do I need to make repayments?
A: Yes, if your Repayment Income exceeds the $67,000 threshold, you must start making compulsory repayments, even if you are still studying. - Q: Are voluntary repayments affected by this change?
A: No. Voluntary repayments do not change your compulsory repayment obligation. They simply reduce your overall debt balance. - Q: What if my employer withholds too much?
A: If your employer withholds more than your final compulsory repayment amount, the ATO will return the over-withheld amount to you as part of your tax return assessment. - Q: Will this change help reduce my debt faster?
A: This change will reduce financial pressure in the short-term for lower-income earners. The actual speed of reduction depends on your income, the repayment percentage applied, and the annual indexation rate. - Q: Where can I see the exact repayment percentage rates?
A: The full table of repayment thresholds and marginal rates is available on the Australian Taxation Office website. - Q: What if I forget to tell my employer about my loan?
A: If you don’t advise your employer, they won’t withhold the additional PAYG. This could result in a large tax bill at tax time, as you will have to pay the full compulsory repayment amount to the ATO. - Q: Who is Services Australia?
A: Services Australia is the government agency that delivers social, health, and student services and payments, including the administration of the student loans themselves.
