HECS-HELP Calculator Australia 2026: Repayment Thresholds, Indexation, and the New Marginal System
How HECS-HELP repayments actually work in 2026 after the two big reforms — the lower-of-CPI-or-WPI indexation rule (backdated to 2023), the new marginal repayment system from July 2025 that only takes a percentage of income above the threshold rather than the entire income, and worked examples showing real annual repayments at common Australian salaries.
By FreeFinCalc Editorial · Updated October 6, 2026 · Australia 2026-27 financial year data
HECS-HELP (the Australian government student loan system) underwent two major reforms in 2024-25 that fundamentally changed how it works. First, the indexation rule was reformed in mid-2024 so that loans are now indexed to the LOWER of CPI or the Wage Price Index (backdated to give relief on the controversial 7.1% indexation that hit in 2023). Second, the repayment system changed from July 1, 2025: instead of paying a percentage of your ENTIRE income once you crossed a threshold, you now only pay a percentage of the income ABOVE the threshold. This is a much fairer system that prevents the old cliff-edge problem where a $1 pay rise could cost you thousands in extra HECS repayments. This guide breaks down the new numbers and shows what you actually pay at common income levels.
2026-27 Repayment Thresholds (Marginal System)
Under the new marginal system from July 1, 2025, you pay 15 cents for each dollar of repayment income above $69,528 (2026-27). Below this threshold you pay nothing. Above $129,717 the rate rises to 17 cents per dollar (plus $9,028), and above $186,050 you repay 10% of your total repayment income.
| Income range | Marginal repayment rate | Notes |
|---|---|---|
| $0 - $69,528 | 0% | No repayment |
| $69,529 - $129,717 | 15% | 15c for each $1 over $69,528 |
| $129,718 - $186,050 | 17% | $9,028 plus 17c for each $1 over $129,717 |
| $186,051 and over | 10% | 10% of your total repayment income |
How the New System Compares to the Old
The pre-July-2025 system applied a flat percentage to your ENTIRE taxable income once you crossed a threshold, creating cliff edges where small pay rises triggered massive extra repayments. The new marginal system only takes a percentage of the income ABOVE the threshold, exactly like income tax. This is fairer and removes the perverse incentive to keep income just below thresholds. For most middle-income graduates the new system means lower annual repayments — but the total time to pay off the loan is roughly similar because indexation continues each year.
HECS Indexation: The Lower-of-CPI-or-WPI Rule
From mid-2024, HECS-HELP balances are indexed each June to the lower of the Consumer Price Index (CPI) or the Wage Price Index (WPI). The change was backdated to also reduce the controversial 7.1% indexation from June 2023 (down to 3.2%) and the 4.7% indexation from June 2024 (down to 4.0%). This was a significant relief — many graduates received automatic credits to their HECS balance during 2024 to reflect the recalculation.
| Indexation date | Old rate (CPI only) | New rate (lower of CPI or WPI) |
|---|---|---|
| June 2023 | 7.1% | 3.2% (recalculated) |
| June 2024 | 4.7% | 4.0% (recalculated) |
| June 2025 | Not shown by ATO | 3.2% |
| June 2026 | Not shown by ATO | 2.8% |
Worked Repayment Examples Under the New System
How much HECS comes out of your annual income at common Australian salaries under the marginal system, assuming you have a HECS-HELP balance.
| Annual salary | Income above $69,528 | Approximate HECS repayment |
|---|---|---|
| $50,000 | $0 | $0 |
| $60,000 | $0 | $0 |
| $70,000 | $472 | ~$71 |
| $85,000 | $15,472 | ~$2,321 |
| $100,000 | $30,472 | ~$4,571 |
| $120,000 | $50,472 | ~$7,571 |
| $160,000 | $90,472 | ~$14,176 |
Should You Make Voluntary Repayments?
Voluntary HECS-HELP repayments USED to attract a 10% bonus that ended in January 2017. Today there is no bonus, so the case for voluntary repayments is purely about avoiding indexation. The math: if HECS indexation in any given year is 3% and you can earn 7% return on the same money in an investment portfolio (or save 6% interest paying down a mortgage), the investment or mortgage payment is the better use of cash. However, if you have spare cash sitting in a low-interest savings account earning less than the indexation rate, paying down HECS is mathematically optimal. The other consideration: HECS-HELP debt does not count toward debt-to-income ratios for mortgages in the same way as other debt, so it does not necessarily harm your borrowing capacity.
Frequently Asked Questions
How much do I have to repay HECS in 2026?+
Under the new marginal system from July 1, 2025, you only pay HECS on the portion of your income above $69,528 (2026-27). The marginal rate is 15% on income from $69,529 to $129,717, then $9,028 plus 17c per dollar over $129,717 up to $186,050, and 10% of total repayment income above $186,050. For a $70,000 salary, that means about $71 a year in HECS repayments. For $100,000, about $4,571. The new system replaces the old cliff-edge system where small pay rises triggered huge extra repayments.
What is the HECS repayment threshold for 2026-27?+
The HECS-HELP repayment threshold is $69,528 for the 2026-27 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 $69,528, not on your whole income.
How is HECS indexed in 2026?+
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 was 3.2% and the 1 June 2026 indexation was 2.8%, both under the lower-of-CPI-or-WPI rule. Indexation applies to your balance as it stood on June 1, BEFORE any voluntary repayments you make in May or June.
Should I pay off my HECS early?+
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.
Does HECS affect my mortgage application?+
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.
Can I claim HECS repayments on tax?+
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.
What happens to HECS if I move overseas?+
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.
How long does it take to pay off HECS?+
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.
Sources & Disclaimer
HECS-HELP repayment thresholds and rates: ATO Study and training support loans page. Indexation reform: Department of Education Australia HELP indexation reform announcement (2024). Marginal repayment system: Department of Education Australia HELP changes from July 2025. Worldwide income reporting: ATO HELP debt and overseas residents page. This article is for educational purposes only and is not personalised tax advice.