HECS-HELP repayment, in plain English
How HECS-HELP works after you start earning. Repayment thresholds, the rate-on-the-whole-of-income rule, indexation, and what happens if your income drops below the threshold.
HECS-HELP is the Australian Government's income-contingent student loan for domestic undergraduate students at a Commonwealth Supported Place. It funds the student contribution amount that the university charges, and you repay through the ATO once you start earning above a published threshold.
What HECS-HELP covers
HECS-HELP covers the student contribution for each subject you enrol in at a CSP. It does not cover textbooks, accommodation, transport or living costs. Those sit outside the loan.
For full-fee places, FEE-HELP is the equivalent program. The repayment rules are the same once the debts hit the ATO.
How repayment works
Three rules make HECS-HELP different from other loans you might have heard about:
- Income-contingent. You only repay in years where your repayment income is above the lowest threshold. In 2024-25 that threshold is $54,435.
- Rate on the whole of income. Once you are over the lowest threshold, the band's rate applies to the whole of your repayment income, not just to the amount above the threshold. A small pay rise that pushes you into a higher band can mean a meaningfully higher annual repayment.
- Indexation, not interest. There is no interest on a HECS debt. The outstanding balance is indexed each 1 June. From the 2024 release of indexation rules onwards, indexation is the lower of CPI or the Wage Price Index, so the debt cannot grow faster than wages.
Repayment income, not just salary
The ATO calculates compulsory repayment from "repayment income". That figure adds together:
- Your taxable income.
- Any reportable fringe benefits (RFB).
- Reportable employer super contributions (RESC), such as salary-sacrificed super above the compulsory rate.
- Net investment losses, such as a rental property you negatively gear.
- Exempt foreign employment income.
This means salary-sacrificing into super does not always reduce your HECS repayment, because the sacrificed amount usually flows back into repayment income via RESC.
What you should do at tax time
Your employer withholds HECS amounts during the year if you tick the right box on the Tax File Number Declaration form (I have a HELP, VSL, AASL, SSL, ABSTUDY SSL or TSL debt). When you lodge your return, the ATO reconciles the withheld amount against the rate that actually applies to your repayment income.
If you have multiple jobs, ask your secondary employer to withhold extra. Otherwise you can end up with a bill at tax time because each employer assumes you only earn what they pay you.
Voluntary repayments
You can pay extra into your HECS-HELP debt at any time via BPAY or the ATO online services. Voluntary repayments reduce the balance immediately, which means less indexation on 1 June. There is no longer a discount on voluntary repayments; that ended in 2017.
For the active calculator that turns this into dollars, see the HECS-HELP repayment calculator.
The information here is general and explanatory only and does not constitute financial advice. For advice on your circumstances, see a licensed financial adviser.