HECS-HELP Repayments 2025/26: How Student Debt Works in Australia
HECS-HELP is how most Australians pay for university, and repayments start automatically once you earn enough. This guide explains the 2025/26 repayment thresholds and rates, how the debt is indexed, and how much comes out of your pay.
If you studied at an Australian university, you almost certainly have a HECS-HELP debt — and once you earn above a threshold, repayments start coming out of your pay automatically. This guide explains how HECS-HELP repayments work for 2025/26, the income thresholds and rates, how indexation affects your balance, and how much you'll actually repay, with worked examples.
To see your take-home pay with HELP repayments included, use our Australia Income Tax Calculator. First, let's understand how the system works.
What is HECS-HELP?
HECS-HELP is the Australian government loan scheme that covers university tuition. Unlike a normal loan, it charges no interest — but the balance is indexed each year to keep pace with inflation, so it still grows over time. Repayments are made through the tax system once your income passes a threshold, which is why many people barely notice they're paying it.
HECS-HELP repayment thresholds for 2025/26
Repayments are income-based and rise with what you earn. They start once your income exceeds the minimum threshold — around $54,435 for 2025/26 — and the rate climbs in steps as income increases:
| Repayment income | Approximate rate |
|---|---|
| Below ~$54,435 | 0% |
| ~$54,435 to ~$62,850 | 1.0% |
| ~$66,000 to ~$70,000 | 2.5% |
| ~$80,000 to ~$84,000 | 4.0% |
| Highest band (~$150,000+) | 10.0% |
The rate applies to your entire repayment income, not just the amount above the threshold — an important distinction from income tax, which is marginal. We explain how the marginal tax brackets differ in our guide to Australia income tax rates 2025/26.
Worked example: HECS on an $80,000 salary
Suppose you earn $80,000 with a HECS-HELP debt. Your repayment rate at that income is around 4%:
- $80,000 × 4% = $3,200 per year in HECS repayments
That $3,200 comes out through your pay across the year, on top of your income tax and Medicare levy. So on an $80,000 salary, HECS is a meaningful extra deduction — it's why your take-home can feel lower than a colleague's on the same salary who has no student debt.
How indexation affects your balance
Each year, on 1 June, your outstanding HECS-HELP balance is indexed — increased in line with inflation. In years of high inflation this can add a noticeable amount to your debt. Because repayments are deducted throughout the year but applied after indexation in some cases, the timing matters. Making a voluntary repayment before the indexation date can reduce the amount that gets indexed, saving you money — a bit like how paying down debt early saves interest, which we cover in our guide to debt snowball vs avalanche.
Should you pay HECS off early?
This is debated. Because HECS charges no interest (only indexation), it's often one of the "cheapest" debts you'll ever have, so rushing to clear it isn't always the best use of money — you might do better investing, where compound interest works in your favour. However, making a small voluntary payment just before the annual indexation date can be worthwhile. Weigh it against your other financial goals rather than paying it off on principle.
Frequently asked questions
What income do HECS-HELP repayments start at?
For 2025/26, compulsory repayments begin once your repayment income exceeds roughly $54,435. Below that, you pay nothing, though indexation still applies to your balance.
How much is HECS on an $80,000 salary?
Around 4% of your income, or about $3,200 per year at $80,000. This is deducted through the tax system on top of income tax and the Medicare levy.
Does HECS-HELP charge interest?
No interest, but your balance is indexed to inflation each year on 1 June. In high-inflation years this can add a significant amount, which is why some people make voluntary repayments before that date.
Is the HECS repayment rate marginal like income tax?
No. Once you cross a threshold, the repayment rate applies to your entire repayment income, not just the portion above the threshold. This differs from income tax, which is charged marginally.
Should I pay off my HECS debt early?
Not necessarily. Because HECS only grows with indexation and charges no interest, it's often a low-cost debt. Many people prioritise other goals or investing instead, though a voluntary payment just before indexation can save a little.
This article was last reviewed for the 2025/26 financial year. Figures are for guidance only — always verify with the ATO or a registered tax agent.