Important Updates to Study and Training Support Loans

From 1 June 2025, all study and training support loans will be reduced by 20%.
This reduction will apply automatically—you don’t need to do anything. After this, the annual indexation (inflation adjustment) will be applied to the lower balance.
[ATO – Study and training support loan changes are now law](Australian Taxation Office)
Example: If your loan balance was $50,000 on 1 June 2025, it will now be $40,000.

2. No Change to Tax Return Timing

Please lodge your 2025 tax return as usual. The timing of lodgement will not affect whether you receive the loan reduction.
[ATO – Study and training loans – what’s new](Australian Taxation Office)

3. Possible Refunds for Overpayments

If you made repayments between 1 June 2025 and the date the reduction is applied, you may have overpaid. In that case, the ATO will apply a credit to your account. If you don’t owe any other tax or government debts, you may receive a refund.
Make sure your bank account details with the ATO are correct to ensure any refund is paid promptly.

4. New Repayment Thresholds from 2025–26

From the 2025–26 financial year, compulsory repayments will only begin if your repayment income is over $67,000. Here’s how the new structure works:

• Up to $67,000 → Nil
• $67,001 – $125,000 → 15 ¢ per $1 over $67,000
• $125,001 – $179,285 → $8,700 plus 17 ¢ per $1 over $125,000
• $179,286+ → 10 % of total income

5. PAYG Withholding and Instalments

PAYG withholding tables will be updated later this year for the new repayment structure, meaning you may notice higher take-home pay.
If you’re on PAYG instalments, the new rules will apply from the 2026–27 income year. You can vary instalments, but must remain within 85% of your total tax liability to avoid penalties.
[ATO – Compulsory repayments; advising your employer](Australian Taxation Office)

6. Fairer Indexation Rates

Indexation on loan balances is now based on the lower of the Consumer Price Index (CPI) or the Wage Price Index (WPI). Past rates have been revised:

• June 2023: 3.2% (instead of 7.1%)
• June 2024: 4% (instead of 4.7%)

The ATO has already re-credited eligible accounts and issued refunds where applicable.

Example in Action

Suppose your loan was $80,000 on 1 June 2025:

• 20% reduction → new balance: $64,000
• Indexation applies to $64,000 (not $80,000)
• If your income is $90,000 in 2025–26:
  • Amount above $67,000 = $23,000
  • Repayment at 15% = $3,450

What You Should Do Now

• Lodge your tax return as usual
• Check and update your bank details with the ATO
• Monitor your loan balance via ATO online services or the ATO app
• Contact us if you’d like a review of how the changes affect your tax or repayment position

Conclusion

With study and training loan reforms now in effect, the focus is on fairer repayment thresholds, reduced indexation, and significant loan balance relief. At D&B Accountants, our role is to guide clients through these changes—ensuring correct reporting, accurate repayment calculations, and proactive planning. By staying ahead of the rules, we help you avoid surprises, maximise available benefits, and maintain confidence in your long-term financial position.