HECS-HELP Repayment Thresholds 2025-26: When & How Much You Repay

HECS-HELP compulsory repayments are based on your repayment income (RI), which is your taxable income plus any net investment losses, reportable fringe benefits, and reportable super contributions. For 2025-26, repayments begin when your RI exceeds approximately $54,435.

The repayment rates are progressive, starting at 1% of your total RI at the lowest threshold and increasing to 10% at the highest income levels (above approximately $151,200). It's important to note that the repayment percentage applies to your entire RI, not just the amount above the threshold — so crossing the threshold by even $1 triggers a repayment on your whole income. For example, at RI of $60,000, the repayment rate is approximately 2%, meaning you repay $1,200 for the year.

What actually happens: At $80,000, the rate increases to approximately 3.5%, meaning $2,800. These amounts are withheld from your pay by your employer through PAYG withholding.

HECS-HELP debts are indexed annually on 1 June based on the Consumer Price Index (CPI). Following public outcry over the 7.1% indexation applied in June 2023 (driven by high inflation), the government changed the indexation formula to the lower of CPI or the Wage Price Index (WPI), backdated to June 2023.

This means HECS debts now grow at the rate of inflation or wage growth, whichever is lower — providing better protection for borrowers during periods of high inflation. Indexation is applied to the outstanding balance, not the original debt amount. For a $30,000 debt, 3% indexation adds $900 to your balance.

While this is not interest in the traditional sense (HECS-HELP is interest-free), it does increase the total amount you repay over time. Making voluntary repayments before 1 June each year can reduce the base on which indexation is applied.

You can make voluntary repayments on your HECS-HELP debt at any time through the ATO's online services. Previously, voluntary repayments of $500 or more attracted a 5% bonus (effectively a discount), but this incentive was removed in 2017.

Here's the thing. Without the bonus, there's limited financial incentive to pay off HECS faster — since the debt is indexed at CPI or WPI (whichever is lower) and carries no real interest, it's one of the cheapest forms of debt available. In most cases, you're better off directing surplus cash towards higher-interest debts (credit cards, personal loans) or investments that earn returns above the indexation rate. However, some people prefer the psychological benefit of being debt-free, and voluntary repayments make sense if you're approaching a major life event like applying for a home loan, as reducing your HECS balance increases your borrowing power.

HECS-HELP debt reduces your home loan borrowing power because lenders factor the compulsory repayment into their serviceability assessment. The repayment comes out of your income before the bank calculates how much you can afford in mortgage repayments.

For someone earning $80,000 with a HECS repayment of $2,800 per year, this reduces borrowing power by approximately $25,000 to $35,000 depending on the lender. You can reduce this impact by making voluntary repayments to bring your balance below the threshold, or by reducing your RI through salary sacrifice into super (which removes that income from the HECS repayment calculation). Some lenders are more favourable to borrowers with HECS debt than others — a mortgage broker can help identify which lenders will give you the best outcome.

Use our HECS Calculator to see your current repayment obligation at different income levels.

If your income drops below the repayment threshold — for example during parental leave, a career break, or reduced work hours — your compulsory repayments stop automatically. There's no penalty for not repaying during low-income periods, and the debt simply carries forward with annual indexation.

Let's break this down. This makes HECS a remarkably borrower-friendly system compared to private student loans in other countries. If you move overseas, you're still required to lodge an Australian tax return and make compulsory repayments on your worldwide income once it exceeds the threshold. The ATO has been cracking down on expats who fail to report their overseas income for HECS purposes.

If your income fluctuates between above and below the threshold, your employer adjusts PAYG withholding automatically when you update your Tax File Number Declaration. Not complicated — just easy to miss.

You can check your current HECS-HELP balance through your myGov account linked to the ATO. The balance is updated annually after the ATO processes your tax return and applies any compulsory or voluntary repayments, followed by the 1 June indexation.

Your income statement from your employer shows the amount withheld for HECS during the year, and this is reconciled against your actual liability when you lodge your return. If too much was withheld (because your income was lower than expected), you will receive a refund. If too little was withheld (because you had additional income sources), you will owe additional repayment.

Use our HECS Calculator to model your repayments at different income levels and see how many years it will take to pay off your balance at your current income.