20% HECS debt reduction and the remaining HECS loan

 Author: JayATO(Community Support)Community Support

24 Nov 2025

Hi @ShaC

The 20% HECS debt reduction applies to your debt balance as it was on 1 June 2025, before indexation. This reduction is being processed automatically and you don't need to do anything to get it.

For your situation with around $3,000 remaining debt, the 20% reduction will be applied to whatever your total balance was on 1 June 2025. The reduction happens before the 2025 indexation is recalculated on the lower amount.

Regarding your pay, the increase in tax withholding is likely due to updated PAYG withholding schedules. The new compulsory repayment system means people earning above $67,000 only pay 15% on income above that threshold, rather than the old percentage rates. Your employer is using updated tax tables that reflect these changes.

For your 2025-26 tax return, you'll lodge as normal. Any compulsory repayments withheld from your pay throughout the year will be applied to your study loan account when your return is processed. If you've overpaid due to the changes, you may get a refund.

Check your study loan balance using the ATO app or ATO online services to see when the 20% reduction has been applied. You'll get a notification via SMS, email or myGov inbox when it's processed.

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