Student debt to be cut by 20 per cent

Student debt is about to become a little lighter for many Australians. The Universities Accord (Cutting Student Debt by 20 Per Cent) 2025 bill has officially been passed in Parliament, bringing in a suite of reforms designed to make student loans fairer, more affordable and better aligned with today’s cost-of-living pressures. 

This is a major step forward for those undertaking vocational education and training, aiming to make tertiary study more accessible for all Australians. 

What’s changing? 

The new legislation applies to a range of student loans, including: 

• VET Student Loans (VSL) 
• Australian Apprenticeship Support Loans (AASL) 

Here are the key changes taking effect: 

• One-off 20 per cent reduction in debt: Anyone with a VSL or AASL debt incurred on or before 1 June 2025 will automatically receive a 20 per cent reduction in their loan balance. 
• Higher minimum repayment threshold: From the 2025–26 financial year, the minimum income at which loan repayments begin will rise from $54,435 to $67,000. This threshold will continue to be indexed to wage growth in future years. 
• Fairer repayment system: A new marginal repayment system means repayments will only apply to the portion of income above the threshold, instead of being calculated on total income once the threshold is exceeded. You can use this handy calculator to estimate your new debt and future repayments.  

What it means for apprentices 

Australian Apprentices will benefit from this new reform on top of the existing 20 per cent loan discount already available to those who successfully complete their apprenticeship. 

Apprentices do not need to apply. The Australian Taxation Office (ATO) will automatically reduce eligible debts by 20 per cent based on the debt balance as at 1 June 2025. If any indexation was applied to that debt, it will also be adjusted. 

Want to learn more? 

For full details on Australian Apprenticeship Support Loans and the recent changes visit the Department of Employment and Workplace Relations website.