Student Loan Reform: What Employers and Staff Should Know
- Lockwood and Ward
- Oct 7
- 1 min read
The Government has passed new laws to reduce student debt and ease repayment thresholds, following the 2025/26 Federal Budget.
The reforms include:
A one-off 20% reduction in HELP debts and other student loans incurred on or before 1 June 2025
An increase in the compulsory repayment threshold from $54,435 to $67,000 in the 2025/26 income year, with annual indexation linked to wages
A marginal repayment system where compulsory repayments apply only to income above the new threshold.
For employees, this means a lower debt balance and more take-home pay as repayments fall. For employers, payroll systems will need to reflect the higher threshold and the new repayment calculation method.
These reforms are significant for SMEs. Lower compulsory repayments may open opportunities for staff to salary sacrifice into superannuation or take on other financial commitments. Payroll teams should ensure systems are updated to avoid compliance issues.
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At Lockwood & Ward, we work with employers to keep payroll, tax, and compliance aligned with new legislation. If your staff are affected by these changes, we can help you adjust payroll and review opportunities to support your team.
Contact Lockwood & Ward on (02) 9299 7044 or stop by Level 9, 50 Clarence Street, Sydney NSW 2000.
