The Australian Tax Office will apply the reprieve from mid-November and anticipates half of everyone who owes a student debt will be better off by December.
Almost everyone else will see the cut applied before Christmas, Education Minister Jason Clare says.
"This is already locked in to people's balances ... but soon they will be able to see it and feel it," he said.
"Just out of uni, just getting started - this is taking a weight off their back."
The cut will be backdated to June 1, before indexation happened.Â
Recipients will receive a text or email when the cut occurs and will be able to check their accounts to view the lower balance.
Someone with the average debt of $27,600 would have $5520 wiped from their outstanding Higher Education Loan Program loans, Mr Clare said.
"We promised we would cut your student debt by 20 per cent and we are delivering," he said.
The one-off HECS debt reduction for uni students was confirmed when the federal opposition announced it would back the proposal in July.
The policy was a major Labor election commitment and the first legislation introduced to the new parliament.
Despite the coalition saying during the campaign it would not support the measure, new leader Sussan Ley agreed the opposition would not stand in the way.
"We do care about students who are struggling with the cost of living and I said we'd be positive where we can be and critical where we need to be," she said at the time.
The laws will also raise the income threshold for minimum HECS debt repayments.
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