HECS-HELP Repayment Calculator
2025–26 compulsory repayment — new marginal system. Threshold raised to $67,000.
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How does HECS-HELP work in Australia — and what changed in 2025?
HECS-HELP is an Australian Government loan that covers your student contribution fees at university. Instead of paying upfront, the government pays on your behalf and you repay through the tax system once your income exceeds a threshold. It is widely considered the cheapest debt available in Australia — there is no interest charged, only an annual CPI-linked indexation adjustment.
In 2025, two major changes happened. First, all HECS-HELP and other student debts were reduced by 20% automatically on 1 June 2025. If you had a $30,000 debt, it became $24,000 overnight — no application required. Second, the repayment system changed from a flat-rate model to a marginal system.
Under the old system (2024–25 and earlier), once your income crossed a threshold, you repaid a percentage of your entire income — which created cliff effects where earning one extra dollar could cost you hundreds in extra repayments. The new system works like income tax: you only repay on income above $67,000, not your full salary.
- New threshold: $67,000 for 2025–26 (up from $54,435). Below this, no compulsory repayment regardless of your debt size.
- Marginal rates: 15% on each dollar above $67,000 (up to $125,000), then 17% on each dollar above $125,000 (up to $179,285), then 10% of total income above $179,286.
- Example: On $80,000 income, you repay 15% of $13,000 (the amount above $67,000) = $1,950. Under the old system at $80,000, you would have repaid $3,600 — the new system saves $1,650 per year.
- HECS and borrowing power: Lenders treat HECS repayments as a monthly liability, reducing your borrowing power. A $67k income earner with HECS typically borrows $10,000–$30,000 less than one without.
- Indexation: Debts are indexed annually (previously to CPI, now to the lower of CPI or Wage Price Index). Indexation is applied on 1 June each year.
Frequently asked questions
Yes — lenders treat your compulsory HECS repayment as a recurring monthly liability, similar to a credit card or car loan. This reduces your assessed disposable income and therefore your borrowing power. At $90,000 income, your HECS repayment under the 2025-26 system is approximately $3,450 per year ($288/month), which could reduce your borrowing power by $30,000–$60,000 depending on your lender. If you are close to paying off your HECS, consider whether clearing it before applying improves your borrowing position.
The argument for paying it off early: it reduces your assessed liability for home loan purposes and removes the indexation risk. The argument against: HECS is the cheapest debt you will ever have — if you have a mortgage, credit card debt, or car loan, those should be paid off first. The exception is just before 1 June each year — making a voluntary repayment before that date means the debt is indexed on a smaller balance, saving you money.
The Australian Government legislated a one-off 20% reduction to all HECS-HELP and other student debts through the Universities Accord (Cutting Student Debt by 20 Per Cent) Bill 2025, which became law on 2 August 2025. The ATO automatically applied the reduction to all debt balances as at 1 June 2025, before that year's indexation. You did not need to apply. Notifications were sent via myGov, email, or SMS.
HECS-HELP is for students in Commonwealth Supported Places (CSPs) — the subsidised university spots. The government pays the majority of your tuition and you pay a student contribution amount, deferred via HECS-HELP. FEE-HELP is for full-fee paying students at approved providers. Both are study debts and repaid the same way through the tax system with the same thresholds and rates.
Yes, as long as you have told your employer you have a HECS debt by ticking the relevant box on your TFN declaration or Withholding Declaration form. Your employer then withholds extra tax based on ATO tax tables, which approximate your annual repayment. The actual repayment amount is calculated at tax time — if too much was withheld you get a refund; if too little, you pay the difference.