🇦🇺 Australian explainer
How HECS-HELP Works
How your student debt is indexed, when repayments kick in, current repayment thresholds, and whether paying it off early makes financial sense.
🎓 Explainer·7 min read·Updated March 2026
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How indexation works
HECS-HELP debt is indexed to the Consumer Price Index (CPI) on 1 June each year. This means your debt grows with inflation — even if you're making repayments. In high-inflation years, this can be significant.
| Year | Indexation rate |
|---|---|
| 2021 | 0.6% |
| 2022 | 3.9% |
| 2023 | 7.1% |
| 2024 | 4.7% |
| 2025 | 2.4% (est.) |
The 7.1% indexation in 2023 added $7,100 to a $100,000 HECS debt — more than many people repaid that year.
2025–26 repayment thresholds
| Income | Rate | Annual repayment |
|---|---|---|
| Below $54,435 | 0% | Nil |
| $54,435 – $62,850 | 1% | $545–$629 |
| $62,851 – $66,620 | 2% | $1,257–$1,332 |
| $66,621 – $70,618 | 2.5% | $1,666–$1,765 |
| $70,619 – $74,855 | 3% | $2,119–$2,246 |
| $74,856 – $79,346 | 3.5% | $2,620–$2,777 |
| $79,347 – $84,107 | 4% | $3,174–$3,364 |
| $84,108 – $88,756 | 4.5% | $3,785–$3,994 |
| $88,757 – $93,969 | 5% | $4,438–$4,698 |
| Above $111,142 | 10% | $11,114+ |
Repayment is withheld by your employer through the tax system — you don't make payments yourself unless you have multiple jobs or other income.
Should you pay it off early?
Whether voluntary repayments make sense depends on the indexation rate versus your alternative investment return:
✓ Pay it off early if…
- Indexation (CPI) is higher than your investment return
- You want certainty and no lingering debt
- You're approaching a mortgage application
- You have cash savings earning little interest
✗ Don't rush to pay if…
- Indexation is low (below 3%) and you can earn more investing
- You have higher-interest debt (credit card, personal loan)
- Your income is near or below the repayment threshold
- Your super is a higher-priority top-up
Frequently asked questions
Does HECS-HELP debt affect my credit score?
No. HECS-HELP debt doesn't appear on credit reports and doesn't affect your credit score. However, it does affect your borrowing capacity for a mortgage — lenders must include your HECS repayments as a liability when assessing your ability to service a loan. A $50,000 HECS debt could reduce your borrowing capacity by $50,000–$80,000 depending on the lender.
What happens to my HECS debt if I move overseas?
Since 2017, Australians living overseas must repay HECS-HELP once their worldwide income exceeds the repayment threshold (same rates as Australian-based taxpayers). You self-assess and lodge an overseas levy return. Previously, overseas residents could avoid repayments entirely — this loophole was closed.
Can I make voluntary repayments to clear HECS faster?
Yes — you can make voluntary repayments of $500 or more any time via ATO online services or myGov. There is no longer a bonus for making voluntary repayments (the 5% bonus was abolished in 2017). Whether to repay early depends on whether indexation exceeds your investment return. If inflation is running at 4–5%, voluntary repayment gives you a guaranteed return at that rate.
Will HECS debt be wiped if I die?
Yes. All HECS-HELP debt is cancelled upon death. It does not pass to your estate or family.
Do I pay HECS on my entire income or just the amount above the threshold?
You pay HECS repayments as a percentage of your entire repayment income, not just the amount above the threshold. For example, at $55,000 income (rate: 1%), you pay $550/year. The rates are graduated — as your income increases, the percentage rate increases too. This is different from how income tax brackets work.