Student Loan Debt Cut in 2025
If you had a study or training loan on 1 June 2025, the government has cut your debt by 20% automatically.
The ATO will update your account and let you know once it is done.
But there are a few things you should do first. Details below.
Some People Will Get Refunds
Your student loan debt has been cut by 20%
If the cut clears your loan completely, and you do not owe any other debts, you may get money back.
The ATO sends refunds to the bank account they have on file. If your accountant’s trust account is listed, it could go there first.
If you still have Debt after the cut
The government makes an annual price rise on study loans, called indexation. This usually means your debt grows each year.
The 2025 increase will be applied after the 20% cut, so your balance will not grow as much.
What You Should Do
- Check your bank account details with the ATO so any refund goes to the right place.
- Lodge your tax return as normal. This does not affect the debt cut.
- If you pay in instalments, talk to your accountant before changing amounts. Paying too little could leave you with a bill later.
Repayments Start Later and Are Smaller
Starting July 2025, you only pay your loan back once your income is above $67,000/year.
Repayments will come from the amount you earn over $67,000. This means most people will pay less each year and some will not need to repay at all.
Employers will update their payroll systems once the ATO gives them the new tables. That means your pay might have less tax taken out for student loan repayments later in the year.
The Bottom Line
Your student debt just dropped by 20%.
For most people, this means:
- Smaller loans
- Smaller repayments
- Less tax taken from pay
Action now: check your bank account details with the ATO so refunds go to the right place, and keep lodging as normal.
Ready to Get Ahead?
If your student debt just dropped, it could be a a good time to redirect those savings into superannuation and retirement planning.
At Magnus, we help business owners and professionals turn tax wins into long-term wealth.
Book a call today and let’s make sure your debt cut helps you retire faster, not just feel lighter today.
