Welcome to the September 2025 Edition of the BFG Report
Student Debt Relief: What it means for you and your family
If you or your children/ grandchildren have student loans, there’s good news. Parliament has passed new legislation that delivers meaningful relief—cutting debt balances and easing repayment obligations for many Australians.
What’s Changed?
Two major concessions have been introduced:
- A 20% reduction in student loan balances
- Lower repayment thresholds for incomes up to $180,000
These changes apply to a wide range of student loans, including:
- Higher Education Loan Program (HELP)
- VET Student Loans
- Australian Apprenticeship Support Loans
- Student Start-up Loans
- Student Financial Supplement Scheme
How the 20% Debt Reduction Works
On 31 May 2025, outstanding student loan balances will be retrospectively reduced by 20%. This will be applied as a credit to the student’s account.
Then, on 1 June 2025, the annual indexation will apply to the reduced balance. For 2025, the indexation rate is 3.2%.
Example:
A student with a $20,000 loan on 31 May 2025 will see their balance reduced to $16,000. After indexation, the new balance becomes $16,512 (assuming no additional repayments were made).
Refunds for Recent Repayments
If someone made compulsory or voluntary repayments after 1 June 2025 but before the legislation passed, they may be eligible for a refund. The refund will cover any excess repayments beyond the new reduced debt amount.
However:
- If the debt was fully repaid before 1 June 2025, no refund is available
- If eligible, the refund will first be used to settle any other government debts, with the remainder returned to the borrower
Lower Repayments Starting 1 July 2025
The income threshold for compulsory student loan repayments is increasing from $56,156 to $67,000 per year. This means fewer people will be required to make repayments—and those who do will pay less.
Under the new rules, repayments will be capped at the lowest of:
- 10% of repayment income
- The total debt amount
- The amount calculated using the new marginal repayment rates
Here’s how the new repayment structure looks:
| Income repayment thresholds# | Marginal rate of payment |
| Below $67,000 | Nil |
| $67,001 to $124,999 | 15c for each dollar over $67,000 |
| Income above $125,000 | $8,700 plus 17c for each dollar over $125,000 |
Note: These thresholds will be indexed annually to Average Weekly Ordinary Time Earnings (AWOTE).
Economic Wrap – July 2025
In July a long running border dispute between Thailand and Cambodia re-ignited with armed conflict between the two nations. On 28 July the two nations agreed to an unconditional ceasefire. In Japan upper house elections were held with Japanese Prime Minister Shigeru Ishiba’s Liberal Democratic Party and junior coalition partner, the Buddhist Komeito party, failing to secure a majority in Japan’s upper house.
Central banks in Australia, Europe and the US all held meetings in July and decided to keep rates on hold. It appears the European Central Bank (ECB) is coming towards the end of its rate cuts having cut rates 8 times since the start of 2024. In contrast, the US Federal Reserve and Reserve Bank of Australia have been less aggressive in cutting rates since 2024 and could cut rates more over the next year if inflation remains controlled.
Australian large cap equities gained 2.39% in July led by the Health Care (+9.05%), Energy (+5.71%) and Utilities (+5.11%) sectors. On the other hand, Financials (-1.02%), Consumer Staples (+0.55%) and Industrials (+2.02%) were laggards. Australian Small Companies outperformed large cap equities gaining 2.82% for the month.
Currency hedged global equities gained 2.06% for the month as the Australian dollar weakened 2.37% versus the US dollar. At month’s end the Australian dollar closed at US$0.6425, down from US$0.6581 a month earlier. Unhedged global equities gained 3.12% for the month. US equities gained 4.07% for the month in Australian dollars.
Bond yields in both Australia and the US moved higher during the month with the US 10-year bond yield gaining 14bps to 4.37% and the US 2-year bond yield gaining 24bps to 3.96%. In Australia, the Australian 2-year bond yield gained 14bps to 3.35% whilst the Australian 10-year bond yield increased 10bps to 4.26%. Rising expectations of fiscal expansion (ahead of the Japanese upper house election) drove the Japanese 10-year government bond yield to its highest level since 2008 during the month with yields on the 30-year Japanese Government Bond rising to a record high of 3.21% in July.
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High yielding internet savings accounts
| Financial Institution | Interest Rate** | Financial Institution | Interest Rate** | |
| Ubank | 5.00% | Bankwest | 4.80% | |
| Rabobank Australia | 5.00% | Move Bank | 4.75% | |
| ING | 4.80% | Macquarie Bank | 4.60% |
** Rates are subject to conditions and change. Rates are correct as at 4 September 2025
This document is prepared by BFG Financial Services (BFG). General Advice Disclaimer: The information in this document is general advice only and does not consider the financial objectives, financial situation or needs of any particular investor. Before acting on this document, you should assess your own circumstances or seek personal advice from us. This report is current as at the date of issue but may be subject to change or be superseded by future publications. The content is current as at the date of issue and may be subject to change. If an investor requires access to other research reports, they should ask their adviser. In some cases, the information has been provided to us by third parties. While it is believed that the information is accurate and reliable, the accuracy of that information is not guaranteed in any way. Past performance is not a reliable indicator of future performance, and it should not be relied on for any investment decision. Whilst care has been taken in preparing the content, no liability is accepted BFG, nor their agents or employees for any errors or omissions in this report, and/or losses or liabilities arising from any reliance on this report. This report is not available for distribution outside Australia and may not be passed on to any third person without the prior written consent of BFG.
