The Universities Accord (Cutting Student Debt by 20 Per Cent) Bill 2025 has now passed Parliament, wiping billions from student debt.
The debt reduction measure erases an estimated 16 billion dollars from student loan accounts, including VET Student Loans (VSL) and Australian Apprenticeship Support Loans (AASL).
What’s changing?
- In the first instance, the measure will reduce outstanding student debt as at 1 June 2025 by 20 per cent, as a one-off reduction. This reduction will apply to over 280,000 VSL and AASL accounts.
- For apprentices, this 20 per cent reduction will be in addition to the existing 20 per cent discount provided by the government to those who successfully complete their apprenticeship.
- It will also increase the minimum repayment threshold from $56,156 to $67,000 in 2025-26 to ease pressure on students by changing how the repayment is calculated.
- A marginal repayment system will be introduced where compulsory student loan repayments are calculated on a portion of income above the new $67,000 threshold.
As an example, for a student who recently completed their Diploma of Nursing and has a current outstanding VSL debt of $10,200, they will have their debt reduced by $2,040. With the Australian Taxation Office applying the changes from 1 June 2025, indexation will also therefore apply to their lowered balance of $8,160.
The VET sector is responsible for ensuring that students can access high quality education and training to give them the skills they need to succeed in the workplace. By providing financial support to students undertaking higher level training in courses that address workplace and industry needs, it creates better employment outcomes and opportunities.
More information
- Frequently asked questions for the changes as they relate to VSL are available on the website.
- For more information on the AASL changes, visit the Australian Apprenticeships website.
- Read the Minister’s media release