Legislation passed in parliament on Wednesday has made long-touted student debt cuts official.

The Australian Taxation Office (ATO) will automatically erase 20 per cent of student debt amounts as they stood on June 1.

Because the cut will be backdated, it will not include the most recent indexation.

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HELP, VET Student Loan, Australian Apprenticeship Support Loan and other student support loan debts are all eligible for the reduction.

“This will remove over $16 billion in HELP and other student debt,” the Department of Education said.

The Greens have criticised the once-off cut, saying the figure actually “collapses to a mere 7.9 per cent” once indexation since Labor’s election in 2022 is accounted for, assuming no repayments had been made on a $30,000 debt.

The average HECS debt for someone in their 20s is currently about $31,500, and a 20 per cent reduction on that will equate to about $6300.

The Greens said that this “doesn’t even touch the sides of this growing burden”.

While Australia Institute senior economist Jack Thrower agreed with that sentiment, he previously told www.20304050.best that it would take nine years’ worth of indexations to bring balances back to where they were before the cuts.

That projected example is based on someone with the average sum of debt, who has not made a single repayment, and on indexation rates within the RBA’s ideal bandwidth of about 2.5 per cent.

The Department of Education said the cut “will particularly help younger Australians”.

“About 70 per cent of people repaying a HELP debt being 35 or younger. This is a critical time for saving, considering first home buying and supporting or starting a family.

“This measure recognises that many Australians are doing it tough and will take pressure off the costs that Australians have to budget for.”