HECS/HELP Repayment Guide Australia 2026: When You Start and How Much You Pay
Around 3 million Australians carry a HECS-HELP debt — the government loan that funded their university education. Unlike most debt, it attracts no interest in the traditional sense, but it is indexed to inflation each year on 1 June. Understanding when repayments begin, how much you will pay, and what happens to your debt over time is essential for financial planning.
What is HECS-HELP?
HECS-HELP (Higher Education Contribution Scheme – Higher Education Loan Program) is the federal government's income-contingent loan scheme for Australian citizens and eligible permanent residents studying at Commonwealth-supported places. Rather than paying upfront for tuition, the government lends you the fees and you repay the loan once your income exceeds the minimum repayment threshold.
Key features:
- No interest (but indexed to CPI or Wage Price Index annually)
- No repayment until your income reaches the minimum threshold
- Repayments are compulsory and collected through the tax system
- The debt does not disappear if you die — it is cancelled upon death — but it does not pass to your estate
When do repayments begin?
Repayments begin automatically once your repayment income exceeds the minimum threshold. For 2025–26, this threshold is $54,435. Repayment income includes your taxable income plus reportable fringe benefits, total net investment losses, and reportable employer super contributions.
If your income is below $54,435, you do not make any repayment that year — no matter how large your debt. There is no minimum annual payment, no consequence for not earning above the threshold, and your debt simply carries forward indexed to CPI.
Repayment rates (2025–26)
Repayments are calculated as a percentage of your total repayment income. The rates increase progressively as income rises:
| Repayment income | Repayment rate |
|---|---|
| Below $54,435 | Nil |
| $54,435–$62,850 | 1.0% |
| $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–$126,468 | 7.5% |
| $126,469–$134,056 | 8.0% |
| $134,057–$142,099 | 8.5% |
| $142,100–$150,624 | 9.0% |
| $150,625–$159,663 | 9.5% |
| $159,664 and above | 10.0% |
Example: With an income of $90,000, your repayment rate is 5.0%. Your annual compulsory repayment is $90,000 × 5% = $4,500. This is withheld from your pay during the year via your employer's PAYG withholding (you notify your employer you have a HELP debt on your Tax File Number declaration form).
Your employer should withhold additional tax throughout the year to cover your HELP repayment. If they do not (common if you have multiple jobs), you will owe the repayment when you lodge your tax return.
Indexation: how your debt grows
Unlike a mortgage, HECS-HELP does not accrue interest. Instead, your outstanding debt is indexed to CPI on 1 June each year. This means your balance increases annually in line with consumer price inflation.
Historical indexation rates:
- 1 June 2021: 0.6%
- 1 June 2022: 3.9%
- 1 June 2023: 7.1% (highest in decades, due to post-COVID inflation)
- 1 June 2024: 4.7%
The 2023 indexation shocked many graduates — someone with a $50,000 debt saw it grow by $3,550 in a single day. In response, the federal government legislated a change: from 2025, HELP debt indexation is capped at the lower of CPI or the Wage Price Index (WPI). This provides some protection when wages are growing more slowly than prices (or vice versa).
The overseas HELP levy
If you move overseas, you do not escape your HELP debt. Australians with a HELP debt who earn income abroad are required to:
- Report their worldwide income to the ATO each year
- Pay a compulsory repayment if their income (converted to AUD) exceeds the minimum threshold
This obligation has existed since 2017. The ATO assesses income using an "overseas income threshold" that mirrors the domestic threshold. If you have a HELP debt and plan to live and work overseas for an extended period, budget for annual repayments just as you would at home.
Impact on your mortgage borrowing capacity
HECS-HELP debt does not appear on your credit file — lenders do not see it through a credit check. However:
- Your HELP debt does appear on your tax return (lenders request two years of tax returns and notices of assessment during a home loan application)
- Lenders include your compulsory HELP repayment as a committed expense when calculating your serviceability (the income available to service a mortgage)
- On a $50,000 HELP debt for someone earning $90,000, the annual repayment is $4,500 ($375/month). This $375/month is treated similarly to a credit card minimum payment — it reduces the amount you can borrow
At current lending ratios, a $375/month HELP repayment reduces borrowing capacity by approximately $60,000–$80,000. For first home buyers, this can be a material factor.
Should you repay your HELP debt before applying for a mortgage? There is no universal answer — if your debt is small and the interest rate savings on a lower LVR mortgage are modest, the opportunity cost of using savings to clear HELP vs putting them toward a deposit depends on the numbers. Speak to a mortgage broker or financial adviser for personalised guidance.