Back in November, prior to the federal election, the Labor government made a commitment to reduce student loans and HECS-HELP debt by an additional 20 per cent. For the countless young Australians grappling with the increasing cost of living, it was a very appealing proposition. With Prime Minister Anthony Albanese being re-elected for a second term, those of us burdened with student debt felt relieved knowing that some relief was potentially on the horizon. That is, provided these promises were indeed kept.

As parliament is scheduled to reconvene this week, this pivotal election promise is poised to be among the initial pieces of legislation discussed by the federal government.

With the bill highly likely to pass through both the lower and upper houses, here’s what you should anticipate and when.

We love discounts on debt, don’t we girls? (Image: Getty)

What was Labor’s HECS cut promise?

In May last year, Labor eliminated $3 billion of HECS-HELP debt to offset the upcoming increase in indexation of HECS-HELP debt in 2024. During the election, they pledged to further reduce all student loan debts by 20 per cent, amounting to an impressive $16 billion in student debt relief for around three million Australians.

This reduction was intended to include those with HELP, VET Student Loan, Australian Apprenticeship Support Loan, and other income-contingent student support loan accounts.

Additionally, the minimum repayment threshold is being increased from $54,000 to $67,000. This is excellent news for those embarking on their careers. According to Education Minister Jason Clare, the average Australian with student debt will see approximately $5,500 deducted from their loans.

Not too bad, right?

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Is it 100% locked in?

Well, not quite. Although the Albanese government promised these changes would be effective from June 1 if re-elected, the legislative changes still need government approval. As parliament does not resume session until July 22, we must wait for the legislation to pass through the official channels before the cuts can be implemented.

While this might sound a bit unsettling, it’s important to remember that Labor holds a solid 94 seats in the lower house and a majority in the upper house, so the legislation is expected to pass smoothly and effortlessly.

The unfortunate part is, with the new financial year, HECS-HELP debt and student loans will increase by 3.2 per cent due to annual indexation.

Time to buy ourselves a little treat!!!

What happens if it is passed?

In a statement to SBS News, Clare mentioned that once passed, the government would retroactively apply the cuts to before the indexation caused student loans to rise, whenever it officially passes.

“The legislation will cut 20 per cent off your student debt and backdate it to June 1, before indexation was applied,” the Education Minister stated.

“This is a transformative change for more than three million Australians with student loans.”

A win for the lazy people amongst us.

Do I have to do anything to be eligible?

Great news — you don’t need to do anything at all! If you have student loan debt, the 20 per cent reduction will be automatically applied to your MyGov and ATO account.

We love to see it!