Student debt Australia-wide has been reshaped by three settings in the past two years: a one-off 20 per cent reduction of HELP balances as at 1 June 2025, worth almost $16 billion across more than three million people; an indexation rule that now applies the lower of the consumer price index and the wage price index; and a repayment system that starts at $67,000 for 2025-26 and $69,528 for 2026-27, with marginal rates in place of the old cliff. For private providers the consequence is that FEE-HELP is a more attractive product for students and a more closely watched one for the regulator.
This article sets out the current settings from the primary sources, what changed and why, and what it means for a private provider that offers or hopes to offer FEE-HELP. It draws on fifteen years of TEQSA and higher education policy work with private providers, whose students carry a disproportionate share of the sector's full-fee debt.
What the current settings are
The Higher Education Loan Program is established under the Higher Education Support Act 2003. Loans are repaid through the tax system once income exceeds a threshold, and balances are indexed each 1 June. The Australian Taxation Office publishes the thresholds. For 2025-26, no repayment is required below $67,000; income between $67,001 and $125,000 attracts 15 per cent of the amount over $67,000; income between $125,001 and $179,285 attracts $8,700 plus 17 per cent of the amount over $125,000; and income of $179,286 or more attracts 10 per cent of total repayment income. For 2026-27 the threshold rises to $69,528, with the bands indexed accordingly.
This is a marginal system, and that is the significant change. Under the previous arrangement a person just over the threshold repaid a percentage of their entire income, so a small pay rise could produce a large repayment. Under the new arrangement repayment applies only to income above the threshold, which the government estimates reduces the minimum repayment for someone on $70,000 by about $1,300 a year.
The 20 per cent cut and the indexation change
The 20 per cent reduction was legislated in 2025 and applied automatically to HELP, VET Student Loan and other student loan balances as they stood on 1 June 2025, before that year's indexation was applied. The government's figures put the total at almost $16 billion across more than three million Australians, with an average reduction of about $5,520 for a person with the average HELP debt of $27,600. No application was required.
Indexation is now set at the lower of CPI and the wage price index rather than CPI alone, and the change was backdated to 1 June 2023, when CPI indexation of 7.1 per cent had produced a public outcry. The ATO's published rates show the 2023 figure revised from 7.1 to 3.2 per cent and 2024 from 4.7 to 4 per cent, with 3.2 per cent applied in 2025 and 2.8 per cent in 2026. The government valued that backdated relief at more than $3 billion, and the two measures together removed close to $20 billion from balances. Our earlier note on the student loan tax settings records where the repayment policy stood before these changes.
Why student debt Australia-wide matters to private providers
Most private higher education providers are FEE-HELP providers, not Commonwealth-supported ones. Their domestic students borrow the full tuition fee, which means the average FEE-HELP debt is higher than the average HECS-HELP debt and grows faster. When indexation ran at 7.1 per cent, a student with a $60,000 FEE-HELP balance saw it rise by more than $4,000 in a single year without studying a day. That was a marketing problem for every provider whose students borrowed to enrol.
The new settings make FEE-HELP borrowing more palatable. A lower indexation rate and a higher, marginal repayment threshold reduce the lifetime cost of a full-fee course and lengthen the period before repayment begins. In my experience that has already changed enrolment conversations, particularly for postgraduate coursework at AQF level 9, where the fee is highest. It has also sharpened the Department of Education's attention to providers whose completion rates are low, because a loan that funds a course the student never finishes is now a larger cost to the Commonwealth. The wider picture is in the impact of student debt on higher education in Australia.
Where FEE-HELP approval meets TEQSA registration
FEE-HELP approval is granted by the Department of Education under the Higher Education Support Act, not by TEQSA, and it comes after registration. The Department requires, among other things, that the provider be registered, financially viable and able to meet its tuition assurance obligations. TEQSA's registration decision is therefore the gate, and the financial viability evidence lodged with it, particularly the five-year projections and the assumptions behind them, is read again by the Department.
There is a practical trap here. Business models built on FEE-HELP revenue from day one do not work, because FEE-HELP approval cannot precede registration and registration takes, in my experience, eighteen to twenty-four months from the decision to proceed. The provider must be able to enrol and teach its first cohorts on up-front fees, and the financial model TEQSA sees must show that. Assessors look for a model that survives without government-supported loans, then improves when they arrive.
What I tell providers about the years ahead
The politics of student debt Australia-wide are not settled: the reduction was a one-off, the indexation formula could be revisited, and the thresholds move each year. Providers should model their student proposition on the current settings but stress-test it against a return to CPI-only indexation and a lower threshold. They should also read their own completion and progression data the way the Department now reads it, because a provider whose FEE-HELP students do not complete will be asked why. The debt settings are, for once, moving in students' favour. The scrutiny of where the money goes is moving the other way.
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Frequently asked questions
How much was the 20 per cent HELP debt reduction worth?
Almost $16 billion across more than three million Australians, applied automatically to balances as at 1 June 2025 before that year's indexation. The average reduction was about $5,520 on an average HELP debt of $27,600.
How is HELP debt indexed now?
Balances are indexed each 1 June at the lower of the consumer price index and the wage price index. The change was backdated to 1 June 2023 and reduced balances by more than $3 billion.
What is the HELP repayment threshold?
$67,000 for 2025-26 and $69,528 for 2026-27. Repayment is calculated on a marginal basis, at 15 per cent of income above the threshold up to the next band, then 17 per cent, with 10 per cent of total income applying at the top band.
Can a new private provider offer FEE-HELP from the start?
No. FEE-HELP approval is granted by the Department of Education after TEQSA registration, so a new provider's first cohorts must be enrolled on up-front fees and its financial model must show viability without loan revenue.
Dr Brendan Moloney is CEO of Darlo Higher Education, Australia's largest specialist TEQSA consultancy. He holds a PhD from the University of Melbourne, is a Cambridge University Press author on governance in higher education, and has advised private providers on registration and course accreditation for more than fifteen years.