In a move set to ease the financial burden for millions of young Australians, the government has begun rolling out a major cut to student loan debt, wiping billions from the accounts of graduates. The decision comes as part of the Albanese government’s pre-election promise, and while the debt reduction is being welcomed by many, the real impact on people’s lives remains to be seen.
The 20% Debt Reduction
Starting on November 22, 2025, a 20% reduction is being applied to the student loans of roughly 100,000 Australians. The measure is part of a broader effort aimed at easing the strain on borrowers and providing relief to those just starting out in their careers. According to Education Minister Jason Clare, this is the largest student loan reduction in the country’s history. For many, it’s more than just a number on a page – it’s a genuine lifeline, potentially offering an average of $5,500 less debt per person.
This massive debt reduction won’t just affect university graduates – it applies to a range of student loans, including those for vocational education, apprenticeships, and startup loans. In total, about 3 million Australians will benefit from a $16 billion reduction in student debt. For many, this means not only a smaller debt but also a lighter load in terms of repayments.
Increasing the Repayment Threshold
As part of the reform, the government has also increased the threshold for when people need to start repaying their loans. Previously, individuals had to begin repaying once their income hit $54,435; that’s now been raised to $67,000, which will help ease the pressure on those entering the workforce. On top of that, the government has also reduced the minimum repayment amounts, making it easier for people to manage their debt without feeling overwhelmed.
But this isn’t the end. The federal government has committed to another round of cuts, slated for mid-2026, potentially wiping another $16 billion of debt from student loan accounts. For many young Australians, this feels like a much-needed break. Prime Minister Anthony Albanese summed it up perfectly: “This is about giving young Australians a fairer start in life,” he said to 9News.
A Step Forward, But Is It Enough?
While these changes have been welcomed with open arms, there are still some who wonder if they go far enough. There are calls for a more comprehensive overhaul of the entire student loan system, which many feel remains too complex and burdensome. But for now, at least 100,000 lucky borrowers will be celebrating a lighter financial load, thanks to these historic changes. It’s a big step forward, but as always, the question remains: will this truly be enough to solve the debt crisis, or is this just a temporary fix?
