If you went to university in Australia, chances are you have a HECS-HELP debt. Around three million Australians carry one. And every year, once your income hits a certain threshold, the ATO starts automatically taking repayments out of your pay — whether you like it or not.
The good news is that HECS-HELP is one of the most generous student loan systems in the world. There is no interest in the traditional sense, repayments are income-based, and if you never earn above the threshold, you never have to pay it back. But there are still a few things that catch people off guard, especially around indexation and how the thresholds work. Let us break it all down.
How HECS-HELP Repayments Work
HECS-HELP repayments are not like a regular loan where you pay a fixed amount each month. Instead, the ATO calculates your repayment as a percentage of your total income once it exceeds a minimum threshold. This amount is collected through the PAYG (Pay As You Go) system — basically, your employer withholds it from your pay, just like income tax.
The key number to know is your HELP Repayment Income (HRI). This is your taxable income plus any net investment losses, reportable fringe benefits, and reportable super contributions. For most PAYG employees, your HRI is pretty close to your taxable income, but it can be higher if you have salary sacrifice arrangements or investment losses.
You can see exactly how HECS affects your take-home pay using our HECS-HELP repayment calculator. Just pop in your salary and it will show you the repayment amount alongside your tax, Medicare, and net pay.
The 2025-26 Repayment Thresholds
For the 2025-26 financial year, compulsory repayments kick in once your HELP Repayment Income reaches $54,435. Below that, you pay nothing. Above it, the percentage increases as your income rises. Here are the key brackets:
- $54,435 – $62,850: 1.0% of your total HRI
- $62,851 – $66,620: 2.0%
- $66,621 – $70,618: 2.5%
- $70,619 – $74,855: 3.0%
- $74,856 – $79,346: 3.5%
- $79,347 – $84,107: 4.0%
- $84,108 – $89,154: 4.5%
- $89,155 – $94,503: 5.0%
- $94,504 – $100,174: 5.5%
- $100,175 – $106,185: 6.0%
- $106,186 – $112,556: 6.5%
- $112,557 – $119,309: 7.0%
- $119,310 – $126,467: 7.5%
- $126,468 – $134,056: 8.0%
- $134,057 – $142,100: 8.5%
- $142,101 – $150,626: 9.0%
- $150,627 – $159,663: 9.5%
- $159,664 and above: 10.0%
Notice something important: the percentage applies to your entire HELP Repayment Income, not just the portion above the threshold. So if you earn $55,000, your repayment is 1% of $55,000 ($550 for the year), not 1% of the $565 above the threshold. This catches a lot of people by surprise.
What Does This Look Like in Real Dollars?
Let us put some real numbers on it. Say you earn $75,000 a year. Your HECS repayment rate is 3.5%, which means you will repay $2,625 over the year — about $101 per fortnight. On top of your income tax and Medicare levy, that is a noticeable chunk out of your pay.
If you earn $100,000, the rate jumps to 5.5%, and your annual repayment is $5,500 — roughly $212 per fortnight. At $130,000, you are looking at 8.0%, which is $10,400 per year or about $400 per fortnight.
The best way to see exactly how this affects you is to use our salary calculator, which shows your HECS repayment alongside all your other deductions in one clear breakdown.
Indexation: The Sneaky Growth Factor
While HECS-HELP loans do not charge interest, they are indexed each year on 1 June. This means the balance goes up to keep pace with the cost of living. For years, this was indexed to CPI (the Consumer Price Index), which tracks inflation.
In June 2023, CPI-based indexation hit 7.1%, which meant some graduates saw their debt jump by thousands of dollars overnight. A $30,000 debt suddenly became $32,130 — wiping out an entire year's worth of repayments for many people.
The good news is that the government has since changed the rules. From 2025-26 onwards, HECS debts are indexed at whichever is lower: CPI or the Wage Price Index (WPI). This change has also been applied retrospectively to the 2023 and 2024 indexation events, meaning many graduates have received a credit on their loan balance.
This is a genuine improvement. It means your HECS debt should never again grow faster than average wages are rising.
Should You Make Voluntary Repayments?
This is a question that comes up a lot. Since HECS does not charge real interest (just indexation), the mathematical answer is usually no — you are better off investing any spare cash where it can earn a return higher than the indexation rate. If inflation is 3% and you can earn 5% in a savings account, you come out ahead by keeping your money and letting the minimum repayments do their thing.
However, there are some situations where voluntary repayments make sense:
- You are about to go overseas for an extended period. HECS repayments are required for overseas earners too, and the ATO can be difficult to deal with from abroad.
- You want to reduce your repayment amount. Paying off your debt faster means the compulsory deductions from your pay stop sooner, boosting your take-home pay.
- You just want it gone. There is a psychological benefit to being debt-free, even if the maths says otherwise.
Note that the government removed the voluntary repayment bonus (which used to give you a 5% or 10% discount on lump-sum payments) several years ago. So there is no financial incentive from the government to pay it off early.
Tips for Managing Your HECS-HELP Debt
- Check your balance. Log into myGov and link your ATO account to see your current HECS-HELP balance and recent transactions.
- Tell your employer. Make sure your employer knows you have a HECS debt so they withhold the right amount. If they do not, you could end up with a big bill at tax time.
- Factor it into salary negotiations. When comparing job offers, remember that HECS repayments reduce your take-home pay. A salary of $70,000 with no HECS looks different from $70,000 with a 2.5% repayment obligation.
- Use the calculator. Our HECS-HELP calculator shows exactly how much comes out of your pay at any salary level, so there are no surprises on payday.
The Bottom Line
HECS-HELP is a fair system — it only asks you to repay when you can afford to, and the new indexation rules mean your debt will not spiral out of control. But it does reduce your take-home pay, and it is important to understand where you sit on the repayment scale so you can budget properly. Check your numbers, know your threshold, and plan accordingly.