HECS-HELP Australia — Repayment, Indexation, and How It Works
This article provides general information only and does not constitute financial advice. For advice tailored to your situation, consult a licensed financial adviser. Learn more.
Contents
HECS-HELP is Australia’s income-contingent student loan system, administered by the ATO. Unlike a bank loan, you pay nothing until your income crosses a minimum repayment threshold — and there is no interest, though the debt is indexed to CPI each year. Once your income reaches the threshold, your employer withholds an additional amount from your wages and the ATO applies it to your HECS balance when you lodge your tax return.
This cluster covers everything you need to know about HECS-HELP: the current repayment thresholds and rates, how indexation works and what it cost borrowers in recent years, voluntary repayments, and what happens to your HECS debt if you move overseas.
How HECS-HELP Works
- HECS-HELP Explained — How It Works in Australia — The loan scheme from start to finish: taking on debt, when repayments start, and how the ATO collects them
- HECS-HELP Repayment Thresholds 2025–26 — The current income threshold ($54,435 for FY2025–26), the full rate table, and how much is withheld at each income band
- How to Declare Your HECS Debt on Your Tax Return — The compulsory repayment process, your HECS statement via myGov, and reconciliation at tax time
- Can I See My HECS Balance? — Viewing your debt via the ATO’s online services in myGov and what the balance means
HECS Indexation
- HECS Indexation Explained — How CPI indexation is applied on 1 June each year, the recent high-indexation years (7.1% in 2023, 4.7% in 2024), and how to interpret the impact on your balance
- HECS Debt History and Indexation Rates — A year-by-year look at indexation rates and how Australia’s student debt system has changed since 1989
Voluntary Repayments
- Making Voluntary HECS Repayments — How to make additional payments via BPAY or the ATO, the timing rules, and whether you get a discount (you don’t — the 5% bonus was abolished in 2017)
- Should You Pay Off HECS Early? — A comparison of paying down HECS versus investing the same money, taking into account indexation, your tax bracket, and opportunity cost
HECS and Major Financial Decisions
- Does HECS Debt Affect Your Borrowing Capacity? — How lenders treat HECS repayments as a liability, the impact on your borrowing power, and strategies to consider
- HECS-HELP Overseas — What Happens? — The worldwide income provisions that require Australians living abroad to make HECS repayments if their income exceeds the threshold
- HECS and Tax Withholding — How to Notify Your Employer — Updating your tax file number declaration or withholding variation to ensure the right amount is withheld
Other HELP Loan Types
- HELP Loan Types — HECS, VET Student Loans, and More — The difference between HECS-HELP, FEE-HELP, VET Student Loans, SA-HELP, and OS-HELP
- HECS for Postgraduate Study — FEE-HELP for full-fee postgraduate courses versus HECS-HELP for Commonwealth-supported places
HECS Repayment Rates — FY2025–26
Once your income exceeds the minimum repayment threshold ($54,435 in FY2025–26), the ATO requires a compulsory repayment as a percentage of your repayment income (roughly your taxable income plus certain reportable fringe benefits and investment losses).
| Repayment income | Repayment rate |
|---|---|
| Below $54,435 | Nil |
| $54,435 – $62,849 | 1.0% |
| $62,850 – $66,500 | 2.0% |
| $66,501 – $70,734 | 2.5% |
| $70,735 – $75,066 | 3.0% |
| $75,067 – $81,397 | 3.5% |
| $81,398 – $86,235 | 4.0% |
| $86,236 – $91,425 | 4.5% |
| $91,426 – $100,502 | 5.0% |
| $100,503 – $107,213 | 5.5% |
| $107,214 – $114,508 | 6.0% |
| $114,509 – $128,889 | 6.5% |
| $128,890 – $141,170 | 7.0% |
| $141,171 – $147,258 | 7.5% |
| $147,259 and above | 10.0% |
Rates updated for FY2025–26. The ATO reviews thresholds annually in line with average wage growth.
Your employer withholds the estimated HECS repayment from your wages once you notify them via your TFN declaration that you have a HECS debt. Any shortfall or overpayment is reconciled when you lodge your tax return.
How HECS Indexation Works
On 1 June each year, the ATO applies a CPI-based indexation factor to all outstanding HECS-HELP (and other HELP loan) balances. This is not interest — it is an inflation adjustment designed to maintain the real value of the debt.
Recent indexation rates and their effect on a $30,000 balance:
| Financial year | CPI indexation rate | Added to $30,000 balance |
|---|---|---|
| FY2020–21 | 0.6% | $180 |
| FY2021–22 | 3.9% | $1,170 |
| FY2022–23 | 7.1% | $2,130 |
| FY2023–24 | 4.7% | $1,410 |
| FY2024–25 | 2.7% | $810 |
The 7.1% indexation in FY2022–23 added over $2,000 to a $30,000 balance in a single year — larger than the compulsory repayment for many graduates. This triggered significant public debate and ultimately led to a government policy of capping indexation at the lower of CPI or the Wage Price Index from FY2025–26.
HECS and Your Tax Return
Your HECS repayment does not appear as a separate item on your payslip in most cases — it is rolled into your PAYG withholding. When you lodge your tax return via myTax, the ATO automatically calculates your compulsory repayment based on your repayment income and applies it to your balance. You do not need to calculate this yourself.
You can view your current HECS balance via myGov → ATO online services → Loans → Study and training loan account.
Frequently Asked Questions
Does my HECS debt affect my credit score?
No. HECS-HELP debt does not appear on your credit file with Equifax, Experian, or illion. Lenders cannot see your HECS balance through the credit bureau. However, lenders do consider your HECS repayments as a committed expense when assessing your borrowing capacity — reducing the loan amount you can qualify for.
Can I pause HECS repayments if I am unemployed?
HECS repayments are automatically paused when your income falls below the repayment threshold. If you are unemployed or your income drops, no compulsory repayment applies for that financial year. You can still make voluntary repayments at any time via BPAY.
What happens to HECS debt if I die?
HECS-HELP debt is cancelled upon the borrower’s death. It does not pass to a spouse or estate. The ATO cancels the balance on notification of death and the debt is extinguished — it is not recoverable from the deceased’s estate.
HECS-HELP and Your Home Loan Borrowing Capacity
HECS-HELP debt affects your home loan borrowing capacity even though it doesn’t appear on your credit file. Lenders are required to assess your ability to service a loan considering all committed expenses — and HECS repayments are treated as a committed monthly outgoing.
How lenders calculate the HECS impact:
Lenders use your HECS repayment income to estimate your annual compulsory repayment, then convert it to a monthly reduction in available serviceability income.
| HECS balance | Gross income | Annual compulsory repayment (FY2025) | Monthly reduction |
|---|---|---|---|
| $30,000 | $90,000 | ~$4,500 (5.0%) | ~$375/month |
| $50,000 | $90,000 | ~$4,500 (5.0%) | ~$375/month |
| $80,000 | $110,000 | ~$7,150 (6.5%) | ~$596/month |
The balance of the HECS debt matters less to lenders than the income-based repayment amount. A $30,000 balance and an $80,000 balance on the same income produce the same monthly repayment impact.
At a 6% interest rate, a ~$375/month reduction in serviceability income typically reduces borrowing capacity by approximately $55,000–$65,000.
Can you pay off HECS before applying for a mortgage to increase borrowing capacity?
Yes — if you have sufficient savings. If paying off HECS means you have less deposit (and trigger LMI or cross into a higher LMI tier), the calculation is not straightforward. Paying $40,000 HECS debt to increase borrowing capacity by $60,000 may be worthwhile — or the $40,000 is better used as deposit to avoid LMI. Model the specific numbers with a mortgage broker.
Voluntary HECS Repayments
There is no bonus for making voluntary repayments (the 5% voluntary repayment bonus was abolished in 2017). However, voluntary repayments reduce your outstanding balance permanently, lowering future compulsory repayments and eliminating the debt sooner.
You can make voluntary HPAY repayments at any time via BPAY (BPAY biller code and reference on your ATO online services account). There is no minimum or maximum voluntary repayment amount.
HECS-HELP for Overseas Australians
If you move overseas, your HECS-HELP obligation does not disappear. From 1 January 2016, Australians living and working overseas are required to make compulsory HECS repayments based on their worldwide income (converted to AUD at the ATO’s exchange rate).
You must complete a Worldwide Income Assessment each year you live overseas if your worldwide income exceeds the repayment threshold. Failure to report can result in an estimated assessment (which may exceed your actual liability) and penalties.
Voluntary repayments from overseas are accepted via BPAY or direct bank transfer to the ATO. The ATO monitors outstanding HECS balances and enforces collection on return to Australia if repayments were not made while abroad.
This section provides general information about HECS-HELP. For advice tailored to your situation, speak with a registered tax agent. Find one through the Tax Practitioners Board register.