HECS-HELP Repayment Calculator

How HECS-HELP repayment actually works

HECS-HELP isn't a loan in the traditional sense. There's no interest, no bank, no monthly bill. Your debt sits with the government and gets collected automatically through the tax system once your income crosses the annual threshold, currently $69,528 for the 2026-27 income year. Your employer withholds an estimated amount from your pay via PAYG (only if you've declared your HECS-HELP debt on your tax file number declaration), and the ATO squares it up when you lodge your tax return. Separately, every 1 June, the ATO applies indexation to whatever balance is left, adjusting it in line with the lower of CPI or the Wage Price Index, a rule backdated to 1 June 2023 so your debt never grows faster than wages. The two processes run independently: repayments chip away at the balance all year, indexation adjusts what's left on one specific day.

2026-27 HECS-HELP repayment thresholds and rates

From 1 July 2025, HECS-HELP repayments switched to a marginal system, exactly like income tax brackets. You only pay the rate on the slice of income above each threshold, not on your whole income once you cross it. That fixed a genuine problem with the old system, where earning one extra dollar could occasionally leave you worse off after HECS. The minimum threshold started at $67,000 for 2025-26 and has since been indexed up to $69,528 for 2026-27.

A few worked examples using the 2026-27 thresholds: on $80,000, you'd pay ($80,000 - $69,528) × 15% = roughly $1,571 for the year. On $100,000, that's roughly $4,571. On $150,000, it's $9,028 plus 17% of the $20,283 above the second threshold, about $12,476. Push high enough (past roughly $186,000) and the 10% total-income cap takes over, so on $200,000 you'd simply pay 10% of $200,000, or $20,000 flat, since the banded calculation would otherwise come out higher. These figures are indicative, always check the current schedule at ato.gov.au before relying on an exact number.

Indexation: why your balance can grow while you're repaying it

This is the part that catches people off guard. At lower incomes, your compulsory repayment can be smaller than the indexation added to your balance that year, so the debt grows in dollar terms even though you're paying it down. The most recently published indexation rate was 3.2%, applied on 1 June 2025, calculated as the lower of CPI or the Wage Price Index. Because that lower-of-the-two rule was backdated to 1 June 2023, borrowers also received automatic credits for the two years where CPI had run hotter than wages: the 2023 rate dropped from 7.1% to 3.2%, and 2024 dropped from 4.7% to 4.0%, with the difference credited straight back to balances (or refunded, if the debt was already cleared). On top of that, everyone with an outstanding HECS-HELP or other student loan balance as at 1 June 2025 had it cut by a flat 20%, applied automatically before that year's indexation. Combined, those two reforms wiped out more than $19 billion in student debt across the country. None of that requires any action on your part, the ATO applies it, you just see the result on your myGov account.

Should you make voluntary repayments, or invest instead?

You can pay extra off your HECS-HELP balance at any time, directly to the ATO, no minimum, no paperwork. The old 5% voluntary repayment bonus was scrapped years ago though, so a voluntary payment buys you a dollar-for- dollar reduction in principal and nothing more. Since indexation is the only real "cost" of carrying the debt (there's no interest), the maths often favours investing instead: if you can reasonably expect to earn more after tax than the indexation rate over the long run, and a diversified portfolio has historically done exactly that, letting compound growth work on that money elsewhere tends to leave you further ahead than shrinking a low-cost debt early. Three questions cut through the decision fast. Are you planning to buy a home soon, where a lower HECS balance could meaningfully help your borrowing power? Is your balance small enough that clearing it now genuinely simplifies your finances? And is your income likely to sit below the threshold for a while, in which case compulsory repayments are already zero and a voluntary payment is really just an investing decision wearing a different hat? For most people on a solid income with a decent-sized balance and no home purchase on the immediate horizon, investing the surplus tends to win on the numbers, but this is one where your own goals and risk tolerance genuinely matter more than the spreadsheet.

How HECS-HELP affects your home loan borrowing power

This is where HECS gets real for a lot of graduates. Lenders treat your compulsory repayment as an ongoing expense when they assess how much you can service, which means a higher repayment directly shrinks your maximum borrowing capacity. Industry estimates put the typical hit at roughly $50,000 to $90,000 in reduced borrowing power for a graduate on an average salary, though the new marginal system has softened this for a lot of lower and middle incomes compared to the old flat-rate rules. Some lenders will disregard your HECS balance entirely if it's on track to be paid off within about 12 months, worth flagging directly with your broker. If you're weighing up whether to chip away at your HECS before you buy, it's worth reading how much deposit you actually need alongside this calculator, and for the bigger picture on what's actually driving borrowing power and affordability right now, see our guide to housing affordability in Australia. Use the calculator above to model your own income, indexation expectations and any voluntary repayments together, then watch how quickly the payoff date moves once you see the real numbers.