What is the HECS-HELP Repayment?
HECS-HELP is Australia's income-contingent student loan. It charges no interest, but the balance is indexed to inflation each June. Repayments are compulsory once income exceeds the threshold (around $54,435), collected through the tax system at rates from 1% to 10%.
Because there is no real interest, HECS is the cheapest debt most Australians will ever hold — which is why voluntary repayment is rarely the best use of money.
Formula & worked example
Balance = (Balance × (1 + indexation)) − repayment
Worked example: $78,000 income with a $32,000 debt. The repayment rate at that income is 3.5%, giving $2,730 a year (about $228 a month). With 3.2% indexation and 3% income growth, the debt clears in 10 years, with indexation adding roughly $11,000 along the way.
How to use this hecs-help repayment calculator
- Enter your annual income — repayment is based on repayment income, close to taxable income.
- Enter your current HECS-HELP balance from myGov.
- Indexation tracks CPI and is applied on 1 June each year.
- Repayments are withheld through PAYG but only credited after you lodge your return.
Smart tips
- HECS charges no interest — only indexation. It is almost always the last debt you should prioritise.
- Indexation is applied on 1 June, so a voluntary payment before then reduces the indexed amount.
- Repayment rates step up sharply at each threshold; a small raise can noticeably increase your repayment.
- Your employer withholds HECS through PAYG but it is only applied after lodgement, so the balance appears unchanged for months.
- HECS debt does not appear on your credit file, though lenders do consider the repayment in serviceability.
Frequently asked questions
When do I start repaying HECS-HELP?
Once your repayment income exceeds roughly $54,435, at 1% rising to 10% for incomes above about $159,664.
Does HECS charge interest?
No. The balance is indexed to inflation annually, which preserves its real value but adds no real interest cost.
Should I pay off HECS early?
Usually not. With no real interest, almost any other debt or investment is a better use of the money.
Does HECS affect my mortgage application?
The repayment reduces your assessable income for serviceability, so it can lower borrowing capacity even though it is not on your credit file.
Want the theory behind the numbers? Read our student loan guides on the Money Blog.