The 2025-26 financial year brought three major changes to HECS-HELP: the threshold jumped to $67,000, a new marginal repayment system was introduced, and all balances were cut by 20%. This guide explains exactly what changed and how to calculate your repayment.
The 2025-26 financial year was the most significant year for Australian student loan policy in decades. Three separate changes came into effect:
Enter your salary to see your exact 2025-26 compulsory repayment and estimated payoff timeline.
Open HECS-HELP Calculator →For the 2025-26 income year, the minimum repayment income is $67,000. Below this, no repayment is required. Above it, the following marginal rates apply:
| Repayment Income | Rate | Method |
|---|---|---|
| $0 – $67,000 | Nil | No repayment required |
| $67,001 – $125,000 | 15c per $1 over $67,000 | Marginal — on excess only |
| $125,001 – $179,285 | $8,700 + 17c per $1 over $125,000 | Marginal — on excess only |
| $179,286+ | 10% of total repayment income | Flat rate on total income |
| Income | Income above $67k | Compulsory Repayment | Rate |
|---|---|---|---|
| $67,000 | $0 | $0 | 0% |
| $75,000 | $8,000 | $1,200 | 1.6% effective |
| $90,000 | $23,000 | $3,450 | 3.8% effective |
| $100,000 | $33,000 | $4,950 | 5.0% effective |
| $120,000 | $53,000 | $7,950 | 6.6% effective |
The most important change in 2025-26 is the shift from flat-percentage to marginal repayment. Under the old system, if your income was $80,000, the entire $80,000 was multiplied by the applicable rate (about 3.5% in the prior system). Under the new system, only the $13,000 above $67,000 is subject to the 15c rate: $13,000 × 0.15 = $1,950.
In July 2025, Parliament passed the Universities Accord (Cutting Student Debt by 20 Per Cent) Act 2025. The law applied a one-off 20% reduction to all eligible study and training loan balances as they stood on 1 June 2025, before that year's indexation was added.
The reduction applied automatically — the ATO processed it without any action required from borrowers. Eligible loans included HECS-HELP, FEE-HELP, OS-HELP, SA-HELP, VET Student Loans, and the Australian Apprenticeship Support Loan.
Unlike commercial debt, HELP balances do not charge interest. Instead, they are indexed each year on 1 June to maintain their real value relative to the cost of living. Since 2023, the indexation rate is the lower of CPI or the Wage Price Index — a reform introduced after the 2023 CPI spike would have applied 7.1% indexation under the old rules.
The indexation applied on 1 June 2025 was 3.2%. This applies only to the portion of the balance that has remained unpaid for more than 11 months.
The honest financial answer for most people: probably not, unless you have a specific reason.
At 3.2% indexation (the most recent rate), your HELP debt grows more slowly than:
In purely mathematical terms, you are better off investing surplus cash rather than voluntarily paying down HECS faster — the investment return exceeds the indexation cost.
The main reason to pay down HECS faster: It increases your home loan borrowing capacity. Lenders include your compulsory HECS repayment in their affordability assessment. Clearing a HECS debt can increase how much you can borrow by $30,000–$60,000 depending on your income and the remaining balance. For people actively planning a home purchase, reducing their HECS balance has a concrete benefit beyond the indexation saving.
This surprises almost everyone who encounters it, and it produces a genuinely counterintuitive outcome.
When you declare your HECS-HELP debt to your employer, they withhold additional PAYG tax from each pay. That extra withholding is not sent to your loan account. It sits with the ATO as general tax withheld.
Your compulsory repayment is only calculated and applied to your loan when you lodge your tax return. Until then, the amount withheld across the year is simply tax credit against your eventual assessment.
This is exactly why the timing of a voluntary repayment matters. A voluntary repayment reduces the balance the day it is received. Making one before the indexation date reduces the balance that indexation is applied to; making one afterwards does not.
The income used to calculate your compulsory repayment is broader than taxable income. It generally includes taxable income plus reportable fringe benefits, reportable employer superannuation contributions, net investment losses, and exempt foreign employment income.
Two consequences follow. Salary sacrificing into super generally does not reduce your HECS-HELP repayment, because the sacrificed amount is added back. And a negatively geared investment property does not reduce it either, because net investment losses are added back.
Consider whether the money has a better use. HELP debt carries no interest — it is indexed, which in some years has been substantial and in others modest. Compare that against the rate on any other debt you hold, particularly credit card debt, which is almost always the more urgent target.
Repayment thresholds, rates, and indexation figures change each year. Verify current figures with the ATO or Study Assist, and speak with a registered tax agent about your position. This page provides general information only and is not financial or tax advice.
Does my employer automatically withhold HECS from my pay?
Your employer withholds extra tax for your HECS repayment if you ticked the relevant box on your Tax File Number declaration. They do not see your balance — they only know you have a debt. If you have multiple jobs, you should only tick the box with one employer or arrange additional withholding with the ATO, to avoid under-withholding and a tax bill at lodgement time.
Does my HECS debt get cancelled when I die?
Yes. HECS-HELP and all other study and training support loan debts are cancelled upon death. They are not passed to your family, partner, or estate. No repayment is required from your estate.
Do I still owe HECS if I move overseas?
Yes. HECS debt follows you overseas. If you are a non-resident earning above the threshold, you must register with the ATO within 7 days of planning to leave Australia for 183 days or more, then report your worldwide income annually. Compulsory repayments based on worldwide income are required if above the threshold. The debt also continues to be indexed while you are overseas.
Can I check my HECS balance online?
Yes. Log into myGov, link your ATO account, and go to Tax → Overview. Your study and training loan balance is displayed, including any recent repayments, the 20% reduction applied in 2025, and indexation history. You can also see your balance through the ATO's official app.
Illustrative ordering. Both methods pay minimums on every debt; they differ only in where the extra payment goes first.