Australian Senate Passes Bill to Cut 20 Percent Off Student Debt

On average the bill will save $5,520 for each individual affected—about 3 million Australians are expected to see their study debt cut.

Students walk at the University of Newcastle's Callaghan campus in New South Wales, Australia on March 24, 2025. Roni Bintang/Getty Images

Labor’s key election pledge to cut student debt by 20 percent is now official with the Australian Senate passing the bill on July 31.

The change is expected to affect 3 million young Australians, delivering an average taxpayer-funded debt reduction of $5,520 per person.

The Albanese government’s Universities Accord Bill received support from Labor, the Greens, and crossbench senators David Pocock, Fatima Payman, and Tammy Tyrrell.

The final Senate vote stood at 36 to 3, with the opposition benches largely empty during the passage of the bill.

The Coalition had opposed the bill, calling it financially unviable and an added burden on the growing deficit.

“This is now going to happen,” Labor’s Education Minister Jason Clare told reporters outside Parliament minutes later.

“It’s guaranteed and it will be backdated to 1 June this year, before indexation happened,” he added.

Relief Backdated, ATO Implementation Underway

The legislation applies a one-time 20 percent reduction to student loans, including HELP, VET Student Loans, and the Australian Apprenticeship Support Loan.

The Australian Taxation Office (ATO) will automatically recalculate loan balances in the coming months, based on the amounts owed as of June 1, 2025.

Clare acknowledged that implementing the new policy would require time, with the ATO needing to write approximately 50,000 lines of code to ensure accurate delivery. Still, he assured students and graduates that the reduction is locked in.

“We’re doing this for a reason—to make sure we honour the promise we made to the Australian people in full,” he said. “I’m glad to see that the parliament has acted.”

A Broader Push for Equity

Prime Minister Anthony Albanese hailed the reforms as a step toward generational equity, telling Parliament the policy will deliver structural and lasting benefits for younger Australians.

“This legislation passed both houses earlier today. It means someone earning $70,000 in the Member for Sturt’s electorate will save $1,300 a year in repayments,” Albanese said during Question Time.

He also outlined additional changes to mortgage rules that would prevent banks from automatically penalising student debt holders when applying for home loans.

“When taken together, the 20 percent debt cut, a fairer repayment system, and fairer mortgage rules all aim at helping young Australians build the future they want—whether it’s buying a home, starting a family, or growing a career,” he said.

“Labor is the party of education and the party of aspiration,” he added.