The average Australian HECS debt of $27,000 will be cut by around $5,500 when the cut is applied.

The exact timing now depends on the Australian Tax Office writing about "50,000 lines of code", according to federal Education Minister Jason Clare.

But the good news is the cut will be backdated to 1 June 2025 when annual indexing normally occurs.

The indexing won't be added to debts until after the 20% cut has been applied.

Mr Clare said those affected will receive a text message when the process is complete, expected to be by the end of this year.

New income threshold for repaying debt

The new legislation also sees an increase in the income threshold for repayments, lifting it to $67,000 before minimum repayments are required.

That's up from the old mark of $54,435.

At the same time, rates of repayment will also be lowered.

Under the old system, those earning $70,000 would have to pay back $1,750 a year.

That will be lowered to just $450 annually.

The government said the new system is designed to make repayments smaller in the early years of the loans.

Calculations will also shift to a marginal rate system, similar to how income tax is levied, instead of being calculated as an overall proportion of income.

The adjustments don't apply to people earning over $180,000 a year.

But can you buy a house sooner?

The big question for many young people with student debts will be whether the changes will help them get into the property market sooner.

Although around $16 billion dollars in HELP loans will be wiped, many individual debts will still be taken into account in home loan applications.

NAB is the latest big bank to clarify its position on assessing student debt in its loan serviceability calculations.

From 31 July, it will disregard student debts of $20,000 or less.

Earlier this year, Australia's largest home lender CommBank said it would not count student debt due to be repaid within a year.

The bank was also piloting dropping the serviceability buffer by 2% (from 3% to 1%) for applicants due to pay off their student loans within five years.

The moves by the big banks are in response to calls from the federal Treasurer for lenders to be allowed to treat student debts differently in their loan serviceability calculations.

HELP balances can be viewed via MyGov accounts.

The federal government's HELP repayment estimator can also give a guide as to how much repayments may be under the new system.


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Update resultsUpdate
LenderHome LoanInterest Rate Comparison Rate* Monthly Repayment Repayment type Rate Type Offset Redraw Ongoing Fees Upfront Fees Max LVR Lump Sum Repayment Extra Repayments Split Loan Option TagsFeaturesLinkComparePromoted ProductDisclosure
5.54% p.a.
5.58% p.a.
$2,852
Principal & Interest
Variable
$0
$530
90%
  • Owner Occupier
  • Variable
  • Principal & Interest
  • 10% Min Deposit
  • Redraw
  • Extra Repayments
  • More details
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Disclosure
5.49% p.a.
5.40% p.a.
$2,836
Principal & Interest
Variable
$0
$0
80%
  • Built and funded by CommBank
  • Owner Occupier
  • Variable
  • Principal & Interest
  • 20% Min Deposit
  • Redraw
  • More details
  • No application or ongoing fees. Annual rate discount
  • Unlimited redraws & additional repayments. LVR <80%
  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
Disclosure
5.64% p.a.
5.89% p.a.
$2,883
Principal & Interest
Variable
$250
$250
60%
  • 100% offset
  • Owner Occupier
  • Variable
  • Principal & Interest
  • 40% Min Deposit
  • Offset
  • Redraw
  • More details
  • Easy application. Fast approval. 100% offset.
  • Unlimited additional repayments free of charge.
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Disclosure
Important Information and Comparison Rate Warning
Important Information and Comparison Rate Warning

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