HECS-HELP Calculator Australia 2026: Repayment Thresholds, Indexation, and the New Marginal System

Under the new marginal system from July 1, 2025, you only pay HECS on the portion of your income above $54,435. The marginal rate starts at 15% on income just above the threshold and rises to 10% at the top tier above $159,664. For a $70,000 salary, that means about $2,650 a year in HECS repayments. For $100,000, about $9,200. The new system replaces the old cliff-edge system where small pay rises triggered huge extra repayments.

The HECS-HELP repayment threshold is $54,435 for the 2025-26 financial year. If your taxable income (HRI - HECS Repayment Income, which includes your salary plus reportable fringe benefits, total net investment loss, foreign income, and reportable super contributions) is below this amount, you pay no compulsory HECS repayment. Above the threshold, the new marginal system applies — you only pay a percentage of the income ABOVE $54,435, not on your whole income.

HECS-HELP balances are indexed each June to the LOWER of CPI (Consumer Price Index) or WPI (Wage Price Index). This rule was introduced in mid-2024 and backdated to reduce the controversial 7.1% indexation from June 2023 (recalculated to 3.2%) and 4.7% from June 2024 (recalculated to 4.0%). The June 2025 indexation came in at approximately 3.2% under the new rule. Indexation applies to your balance as it stood on June 1, BEFORE any voluntary repayments you make in May or June.

Probably not. The bonus for voluntary repayments was abolished in January 2017, so there is no longer a financial incentive beyond avoiding indexation. With indexation now running around 3-4% and stock market index funds returning 7%+ historically, investing the cash usually beats paying down HECS. Paying down a 6%+ mortgage also beats it. The exception is if you have idle cash sitting in a low-interest account earning less than the indexation rate, in which case voluntary HECS repayments make mathematical sense.

Yes, but less than other forms of debt. HECS-HELP repayments reduce your take-home pay, which lenders factor into your serviceability calculation. Most lenders treat HECS like a normal expense and reduce your borrowing capacity by the equivalent of the annual HECS repayment. APRA changed the rules in 2024 to allow lenders to be more flexible about HECS in serviceability calculations, but most banks still consider it. A $80,000 graduate with a $50,000 HECS balance may borrow $30,000-$60,000 less than an identical applicant with no HECS.

No. Compulsory HECS-HELP repayments are not tax-deductible. They are paid through the Pay As You Go (PAYG) system, where your employer withholds an estimated amount from each pay packet based on what you tell them about your HECS status. At tax time the ATO calculates your actual repayment based on your final HRI for the year and any difference is settled in your tax return. Voluntary HECS repayments are also not deductible.

You still have to make HECS repayments even if you live and work overseas. Since 2017, Australian residents with HECS-HELP debts must report their worldwide income to the ATO each year if they live overseas, and make compulsory HECS repayments based on that worldwide income. The thresholds and rates are the same as for Australian residents. Failing to report or repay can lead to interest charges and ATO debt recovery action. You can make voluntary repayments from overseas through the ATO online services or by international transfer.

For a typical graduate with a $30,000-$50,000 HECS balance and a starting salary around $60,000, it takes about 8-12 years to pay off HECS in full under the new marginal system. Higher earners pay it off faster (5-7 years) because their marginal repayment rate is higher. Lower earners or part-time workers may take 15-20 years or longer. Indexation each year slightly extends the timeline. There is no minimum or maximum repayment period — you simply keep paying the marginal rate until the balance reaches zero.