By Jessica Wang

Copyright news

The suite of changes, which are backdated to July 1 and will applied by the ATO from Wednesday, was introduced alongside Labor’s keystone election-winning pledge to slash HECS debts by 20 per cent.

The biggest benefactors of the changes will be for people who earn $70,000 a year. They will pay about $50 less per fortnight under the new system, totalling $1300 a year.

The minimum repayment threshold will be increased from $54,435 to $67,000, while the thresholds have also been condensed from 19 brackets to just four with lowered rates of repayment.

Instead of flat percentage figures, earners making between $67,001 to $125 will pay 15 cents per $1 over $67,000, and people on $125,001 to $179,285 will pay $6700 plus 17 cents per $1 over $125,000.

People on $179,286 and over will continue to pay 10 per cent of their total income.

Treasurer Jim Chalmers said the changes would allow young Aussies keep more of what they earn.

“Young people are front and centre of Labor’s economic plan,” Mr Chalmers said.

“We’re slashing student debt to ease pressure on young people and we’re making repayments fairer to help with the cost of living.”

Education Minister Jason Clare said the changes put “money back in the pockets of young people when they really need it”.

“This will help millions of Australians, many of them just out of uni, just out of TAFE, just out of home, just getting started,” Mr Clare said.

“In every pay packet, these young Australians will get more back and that will take a bit of weight off their back.”

Aussies with student debts as of June 1, 2025 will also begin to see their 20 per cent discounts roll through, with recipients set to receive a text from the ATO once the reduction has been applied.