HECS-HELP is Australia’s income-contingent student loan scheme. If you study at a Commonwealth-supported place at an Australian university, the Australian Government covers part of your tuition fees — and HECS-HELP covers your share. You repay nothing until your income reaches the minimum threshold, and the debt is collected through the tax system rather than directly by a bank.
How HECS-HELP Works — The Full Picture
1. Taking On the Debt
When you enrol in a Commonwealth Supported Place (CSP) at an Australian university, you are charged a student contribution amount each semester. You have two options:
- Pay upfront (no debt, slight discount removed since 2017)
- Defer via HECS-HELP — the government lends you the money and you repay through the tax system
If you defer, the ATO records your HECS-HELP debt. Each semester of deferred fees adds to your running balance.
2. Indexation (Not Interest)
HECS-HELP is not a conventional loan with interest. Instead, the balance is indexed to CPI on 1 June each year to maintain the real value of the debt. In low-inflation years, indexation is minimal. In high-inflation years, the effect is significant:
| Financial Year | Indexation Rate |
|---|---|
| FY2023 (1 June 2022) | 3.9% |
| FY2024 (1 June 2023) | 7.1% |
| FY2025 (1 June 2024) | 4.7% |
| FY2026 (1 June 2025) | ~2.4% (estimate) |
3. When Repayments Begin
You are not required to make any repayment until your Repayment Income reaches the minimum threshold — $54,435 for FY2025–26. Repayment Income is broadly your taxable income plus any reportable fringe benefits, reportable employer super contributions, and net investment losses.
Once you cross the threshold, your employer begins withholding an additional amount from your wages each pay period. The rate depends on your income band (see HECS-HELP Repayment Thresholds).
4. How the ATO Collects Repayments
Repayments work through the PAYG withholding system:
- You declare your HECS debt on your Tax File Number (TFN) declaration to your employer
- Your employer withholds extra tax each pay period based on your income
- At tax time, the ATO applies the withheld amounts against your HECS balance
- If you have been over-withheld, you get a refund; if under-withheld, you owe more
Your compulsory HECS repayment is calculated based on your annual Repayment Income — not your monthly pay. If your income fluctuates, the final reconciliation happens when you lodge your return.
5. When the Debt Is Paid Off
Once your HECS balance reaches zero, repayments stop. The ATO updates your account and informs your employer (or you can notify your employer to stop the additional withholding). If you overpay in the final year, the excess is refunded.
What HECS-HELP Covers
HECS-HELP only covers Commonwealth-supported places (CSPs). If you study in a:
- Full-fee paying place (many postgraduate courses) → FEE-HELP applies
- VET course → VET Student Loan may apply
- Overseas study → OS-HELP applies
See HELP Loan Types for the full breakdown.
HECS and Your Credit File
HECS-HELP debt does not appear on your credit file with credit reporting agencies. However, lenders do ask about it — and your compulsory HECS repayments reduce your take-home pay, which affects your borrowing capacity for a home loan. See Does HECS Debt Affect Your Borrowing Capacity?
Related Articles
- HECS-HELP Repayment Thresholds 2025–26
- HECS Indexation Explained
- Should You Pay Off HECS Early?
- HECS-HELP Australia hub
Frequently Asked Questions
When do I start repaying HECS-HELP? Repayments begin when your Repayment Income exceeds the minimum threshold — $54,435 for FY2025–26. Below that income, you owe nothing for the year.
Is there interest on HECS-HELP? There is no interest. However, the balance is indexed to CPI on 1 June each year. In high-inflation periods, this can add significantly to your debt.
How does the ATO collect my HECS repayments? Through the PAYG withholding system. Your employer withholds extra amounts from each pay cheque. At tax time, these amounts are applied to your HECS balance via your tax return.
This article provides general information about HECS-HELP for FY2025–26. For advice tailored to your situation, speak with a registered tax agent. Find one through the Tax Practitioners Board register.