20% Study & Training Loan Reduction – What It Means for You

A big win for anyone with a Study and Training Support Loan (such as HELP, VSL, TSL or SFSS) – a 20% loan reduction is now law.

If you had an eligible study or training loan on 1 June 2025, the ATO will automatically reduce your balance by 20%, before indexation is applied (interest). This means:

• Your balance will be recalculated on the reduced amount.

• Any extra indexation that was charged will be credited back to your loan.

You don’t need to do a thing. The ATO will handle the reduction and will let you know once it’s been applied.

When Will This Happen?
The ATO will start processing these reductions once their systems are ready. Most people will see the change before 31 December 2025, but more complex cases may take until early 2026.

Lodging Your 2025 Tax Return
You should still lodge your return as normal – there’s no benefit in waiting. The reduction is based solely on your loan balance as at 1 June 2025.

If you’d like an estimate of your 20% reduction, the Department of Education has a HELP Debt Reduction and Repayment Estimator (also works for other eligible loans).

https://www.education.gov.au/help-debt-reduction-and-repayment-estimators

Refunds After the Reduction
If your loan ends up in credit after the 20% cut, you may be entitled to a refund – provided you have no outstanding tax or government debts.

• Refunds will be paid to your nominated bank account.

• Refunds are processed separately to the loan reduction, so there may be a short delay between the credit showing on your loan account and the refund arriving in your bank.

Tip: Make sure your bank details are up to date with the ATO to avoid delays.