Understanding the HECS-HELP Repayment System in Australia
Everything you need to know about how your student loan is indexed, when you need to start paying it back, and strategies for clearing it faster.
The basics of HECS-HELP
When you take out a HECS-HELP loan for your tertiary education, the government pays your fees directly to the institution. You only start repaying this debt once your income reaches a certain threshold, which is adjusted each financial year.
For the 2025/2026 income year, the compulsory repayment threshold is a critical figure to keep in mind. Once your repayment income is above this level, a percentage of your income is deducted. The more you earn, the higher the percentage rate applied to your repayment.
How indexation works
Unlike standard bank loans, HECS-HELP loans do not attract interest. Instead, the balance is indexed each year on June 1st to maintain its real value in line with changes in the cost of living.
Historically, this was tied to the Consumer Price Index (CPI). However, recent legislation changes mean indexation is now capped to be the lower of either the CPI or the Wage Price Index (WPI). This was a significant win for students, ensuring debt doesn't outpace average wage growth.
Pro Tip: Voluntary Repayments
If you choose to make a voluntary repayment, make sure you do it well before the June 1st indexation date (usually mid-May to be safe) so it clears your account before indexation is applied to your balance.
Calculating your repayments
Your employer will usually withhold the necessary funds from your regular pay cycle if you've indicated you have a HECS-HELP debt on your Tax File Number declaration. However, to accurately forecast your take-home pay, you can use our dedicated tool.