HECS/HELP Student Debt Explained: Repayments, Thresholds & More (2025–26)
Published by SWIFT ACCOUNTANTS PTY LTD · Last reviewed
If you studied at a university in Australia and deferred your tuition fees, you almost certainly have a HECS-HELP debt. This guide explains how repayments work, when they kick in, how indexation affects your debt, and what you need to know as a working Australian.
What Is HECS-HELP?
HECS-HELP (Higher Education Contribution Scheme — Higher Education Loan Programme) is a government loan scheme that allows eligible Australian students to defer the cost of their university education. Instead of paying fees upfront, the government pays your tuition fees and adds the amount to your HECS-HELP debt.
Unlike a bank loan, HECS-HELP does not charge interest. However, the outstanding balance is indexed to the Consumer Price Index (CPI) each year on 1 June, meaning the debt increases in line with inflation. Until recently, there was no cap on this indexation — but from 1 June 2025, indexation is capped at the lower of CPI or the Wage Price Index (WPI).
Repayment of HECS-HELP debt is income-contingent — you only repay it when you earn above a minimum threshold, and the repayment amount increases as your income rises. There is no fixed repayment schedule.
2025–26 HECS/HELP Repayment Rates
The following table shows the compulsory repayment rate as a percentage of your total repayment income. Note: these rates apply to your total income — not just the portion above the threshold.
| Repayment Income | Repayment Rate |
|---|---|
| $54,435 – $62,849 | 1.0% |
| $62,850 – $66,620 | 2.0% |
| $66,621 – $70,618 | 2.5% |
| $70,619 – $74,855 | 3.0% |
| $74,856 – $79,346 | 3.5% |
| $79,347 – $84,106 | 4.0% |
| $84,107 – $89,152 | 4.5% |
| $89,153 – $94,501 | 5.0% |
| Rates continue up to 10% at $159,664+ — see the ATO website for full table | |
How HECS Affects Your Take-Home Pay
Once you declare a HECS-HELP debt on your TFN declaration form, your employer withholds additional tax from each pay to cover your estimated annual repayment. This means your take-home pay is lower than it would be without the debt.
Example at $75,000: The repayment rate is 3.5%, meaning a compulsory repayment of $2,625 per year ($101 per fortnight). Your take-home pay is reduced by this amount compared to someone at the same salary without a HECS debt.
At the end of the financial year, your tax return reconciles the actual amount owed. If your employer withheld too much (or too little) for your HECS repayment, the difference is included in your tax refund or bill. HECS repayments paid during the year are applied directly to reduce your HECS debt balance.
Should You Make Voluntary Repayments?
With CPI indexation now capped at the lower of CPI or the Wage Price Index (WPI), and given that CPI has been elevated in recent years, the question of whether to make voluntary repayments is more nuanced than before.
Arguments for voluntary repayments:
- Reduces the balance on which indexation is applied each year
- Eliminates the ongoing reduction in your take-home pay
- Improves borrowing capacity for home loans (lenders see lower liability)
- Psychological benefit of being debt-free
Arguments against:
- No immediate tax benefit (HECS repayments are not tax-deductible)
- If indexed at lower rates, the real cost of the debt may be minimal
- The money might earn more in a high-interest savings account or investment
- Voluntary repayments are non-refundable
The decision depends on your interest rates elsewhere, your income trajectory, and your personal attitude toward debt. For most people, contributing to an emergency fund or high-interest debt (such as credit cards) is a higher priority than early HECS repayment.