Half of all Australians with a student debt have had their loans slashed by 20 per cent.
The Australian Taxation Office will automatically apply the one-off reduction, with a further 1.5 million people to receive the cut by the end of next week.
In total, three million debt holders including university students and apprentices will benefit from almost $16 billion being wiped.
For someone with an average university debt of $27,600, about $5500 will be wiped from the amount they owe.
The reduction will be backdated to June 1, before the last indexation.
Education Minister Jason Clare said the lives of young Australians would be made easier as they balance cost-of-living pressures.
"An important message to let everybody know is it's all happened automatically here, and you can check it on your myGov account," he told reporters in Canberra on Thursday.
"You don't have to do a thing. Just wait for the ding. Just wait for that text message that you'll get next week to confirm that it's all done."
Mr Clare said the debt relief would give people the chance to focus on the next stage of their lives and boost their chances of home ownership.
Skills Minister Andrew Giles said every job being generated in the nation's economy required a post-school qualification.
"This initiative ... along with all the other cost-of-living measures we are undertaking are helping every Australian have every opportunity to get the skills they want to do the jobs they need," he said.
The minimum amount people earn before they have to start making repayments was raised from $54,435 to $67,000.
Minimum repayments have also been reduced. The government has also committed to setting aside 9500 extra places at universities for domestic students.
The additional spots will be allocated for 2026 by the Australian Tertiary Education Commission and will mark 4.1 per cent growth on 2025 numbers.
The universities accord set a target for 80 per cent of the workforce to have a tertiary qualification by 2050, up from the current 60 per cent figure.
