HECS Repayment Calculator Australia 2026: Thresholds, Rates and What's Changed
HECS repayment threshold is $67,000 in 2025-26 under a new marginal system. Here's how to calculate your repayment, understand indexation, and manage debt.
HECS Repayment Calculator Australia 2026: Thresholds, Rates and What's Changed
More than 3 million Australians carry a HECS-HELP debt, and the system that governs how they repay it changed fundamentally in 2025. A 20% debt reduction wiped over $16 billion in student loan balances. The minimum repayment threshold jumped from $54,435 to $67,000. And the old flat-rate repayment model — where a single percentage applied to your entire income once you crossed the threshold — was replaced with a marginal bracket system that only taxes income above the threshold.
If you last looked at your HECS balance or repayment amount before July 2025, the numbers you remember are wrong. The system has been redesigned from the ground up, and for most Australians the changes are genuinely positive: lower repayments, a higher threshold, and a debt that grows more slowly through capped indexation.
This article explains the 2025-26 HECS-HELP repayment thresholds and rates, walks through the calculation with worked examples across common income levels, covers the indexation rules for 1 June 2026, and answers the questions most Australians have about whether to make voluntary repayments, what happens if they move overseas, and when the debt is written off.
What Is HECS-HELP and How Does Repayment Work?
HECS-HELP (Higher Education Contribution Scheme — Higher Education Loan Program) is an Australian Government loan that allows eligible students in Commonwealth Supported Places to defer their tuition fees. Before 2005 the scheme was known simply as HECS. The loan sits with the ATO, not a bank, and it works differently from any commercial debt:
There is no interest. Instead, the outstanding balance is adjusted once a year through indexation on 1 June, set at the lower of the Consumer Price Index (CPI) or the Wage Price Index (WPI). This ensures your debt cannot grow faster than wages.
Repayments are compulsory through the tax system once your repayment income crosses the annual threshold. You do not make monthly loan repayments to a lender — your employer withholds additional tax from your wages throughout the year, and the ATO reconciles the exact amount when you lodge your tax return.
The debt is written off on death. It does not pass to your estate, your partner, your parents, or any guarantor. There is no guarantor. Any outstanding balance is extinguished and the ATO closes the account.
Repayment income is broader than your taxable income alone. The ATO adds back reportable fringe benefits amounts (such as those generated by novated leases), reportable employer super contributions (salary sacrifice into super), net investment losses, and exempt foreign employment income. This combined figure is what determines whether you have a compulsory repayment and how much it is.
The 2025-26 Repayment Threshold and New Marginal System
From 1 July 2025, two structural changes came into effect simultaneously.
The minimum repayment threshold rose from $54,435 in 2024-25 to $67,000 in 2025-26. According to the Department of Education, approximately 180,000 additional Australians with HECS-HELP debt now make no compulsory repayments in 2025-26 as a result.
The repayment calculation method changed from a flat-rate model to a marginal bracket system. Under the old system, once your income crossed the threshold, the applicable rate applied to your entire income — creating steep "repayment cliffs" where a small pay rise could cost hundreds of dollars in additional repayments. Under the new system, you only repay on income above the threshold, and higher rates only apply to the income within each bracket.
The 2025-26 HECS-HELP repayment bands are:
| Repayment Income | Repayment Calculation |
|---|---|
| $0 to $67,000 | Nil — no compulsory repayment |
| $67,001 to $125,000 | 15 cents for every dollar above $67,000 |
| $125,001 to $179,285 | $8,700 plus 17 cents for every dollar above $125,000 |
| $179,286 and above | 10% of total repayment income |
Note that the top band ($179,286 and above) applies 10% to the entire repayment income, not just the portion above $179,285. This is the one band that functions differently from the marginal approach used below it.
For 2026-27, the minimum threshold has been indexed upward to $69,528, reflecting wage growth.
How to Calculate Your HECS Repayment: Worked Examples
The following examples use 2025-26 rates. Substitute your own repayment income (not just your gross salary — remember to add back any reportable fringe benefits or reportable super contributions) into the same formula.
Example 1: Income of $75,000
Repayment income: $75,000 Above threshold: $75,000 − $67,000 = $8,000 Repayment: $8,000 x 15 cents = $1,200 per year ($46.15 per fortnight)
Under the old flat-rate system at $75,000, the rate was approximately 3.5% of total income, producing a repayment of $2,625 per year. The new system saves this person $1,425 annually.
Example 2: Income of $95,000
Repayment income: $95,000 Above threshold: $95,000 − $67,000 = $28,000 Repayment: $28,000 x 15 cents = $4,200 per year ($161.54 per fortnight)
Example 3: Income of $140,000
Repayment income: $140,000 The first $58,000 above $67,000 (up to $125,000) is charged at 15 cents: $58,000 x $0.15 = $8,700 The next $15,000 above $125,000 is charged at 17 cents: $15,000 x $0.17 = $2,550 Total repayment: $8,700 + $2,550 = $11,250 per year ($432.69 per fortnight)
Example 4: Income of $200,000
Repayment income: $200,000 Top band applies: 10% of total repayment income Repayment: $200,000 x 10% = $20,000 per year
Note that at this income level, the compulsory repayment may exceed your remaining debt — in which case the ATO only collects what is owed. Any excess withholding is refunded as part of your tax return.
Quick Reference Table
| Income | Annual Repayment | Per Fortnight |
|---|---|---|
| $60,000 | $0 | $0 |
| $70,000 | $450 | $17 |
| $80,000 | $1,950 | $75 |
| $90,000 | $3,450 | $133 |
| $100,000 | $4,950 | $190 |
| $120,000 | $7,950 | $306 |
| $150,000 | $12,850 | $494 |
These figures are calculated on repayment income. If your income includes reportable fringe benefits or reportable super contributions, add those to your salary before applying the table.
The 20% HECS Debt Reduction: What Happened and Who Benefited
In July 2025, the Australian Parliament passed the Universities Accord (Cutting Student Debt by 20 Per Cent) Bill 2025. Under this legislation, a one-off 20% reduction was applied automatically by the ATO to every HECS-HELP, VSL, SSL, ABSTUDY SSL, and AASL debt balance as at 1 June 2025, before that year's indexation was added.
According to the Department of Education, the measure benefited over 3 million Australians and removed more than $16 billion in student debt in total. You did not need to apply. The ATO processed the reductions automatically and issued notifications via myGov Inbox, SMS, or email. Most accounts were updated by the end of January 2026, with more complex cases finalised by March 2026.
For a graduate with a $30,000 balance as at 1 June 2025: the 20% reduction brought the balance to $24,000. The 3.2% indexation applied on 1 June 2025 then increased it to $24,768. The net result was a balance materially lower than the pre-reform starting point of $30,000 growing at 3.2% to $30,960.
The 20% reduction was a one-off measure. It does not repeat in 2026. If you have not checked your balance since June 2025, log in to myGov and view your ATO online services to confirm the reduction was applied and to see your current balance.
HECS Indexation 2026: How the Cap Works and When It Applies
Indexation is the mechanism by which the ATO adjusts your HELP balance annually to preserve its real value. It is applied on 1 June each year to all HELP debts that have been outstanding for more than 11 months. It is not interest — no daily accrual occurs between 1 June dates.
Since 1 June 2023, following the Universities Accord reforms, indexation has been capped at the lower of the Consumer Price Index (CPI) or the Wage Price Index (WPI). This prevents a repeat of 2023, when CPI surged to 7.1% and debts grew faster than wages.
The indexation rates applied in recent years:
| Year | Indexation Rate |
|---|---|
| 1 June 2023 | 7.1% (pre-reform — the rate that triggered the cap change) |
| 1 June 2024 | 4.0% (post-reform cap applied; would have been higher under old rules) |
| 1 June 2025 | 3.2% |
| 1 June 2026 | To be confirmed by ATO in May 2026 |
The 1 June 2026 indexation rate will be set at the lower of CPI and WPI for the relevant measurement period. Based on Reserve Bank of Australia forecasts and recent ABS quarterly data, the rate for 2026 is expected to fall in the range of 2.5% to 3.6%. The ATO will publish the confirmed figure in late May 2026.
One important practical point: voluntary repayments that reach the ATO before 1 June reduce the balance on which indexation is calculated. If you make a BPAY payment, allow three business days for it to clear. Paying on 1 June itself is too late — the snapshot is taken at the opening of that day. PAYG withholding held by the ATO from your salary does not reduce your indexed balance until your tax return is processed, which is almost always after 1 June. This is why a deliberate voluntary payment timed before 1 June is structurally different from your normal payroll deductions.
Should You Make Voluntary Repayments?
This is the question most HECS-HELP borrowers eventually ask, and the answer depends on your broader financial picture rather than any single rule.
The case for voluntary repayments comes down to this: if you make a voluntary payment before 1 June, you reduce the balance subject to indexation by that amount. If the indexation rate is 3.2%, paying down $10,000 before 1 June avoids $320 in indexation — a guaranteed 3.2% return, risk-free. There is no other debt in Australia that offers a guaranteed return equal to indexed inflation.
The case against is equally clear. With indexation capped at the lower of CPI or WPI, HECS is one of the cheapest debts most Australians will ever carry. A diversified Australian share portfolio has historically returned around 7% per year before tax. After tax at the 30% marginal rate, that is approximately 4.9% net. If your HECS indexation rate is 3.2%, investing those funds instead of making a voluntary repayment could leave you materially better off over a ten-year horizon.
The general framework for deciding:
Pay down HECS first if you are approaching the point where your debt will be cleared within a year or two, or if you are close to clearing it entirely before indexation day and want to avoid one more year of indexation on a small remaining balance.
Consider investing instead if you have high-interest debts (credit cards, personal loans above 6%) that take priority, or if your investment horizon is long enough that after-tax returns are likely to materially exceed the indexation rate.
One common misconception: salary sacrifice into superannuation does not reduce your HECS repayment. The ATO adds salary-sacrificed super back as a "reportable super contribution" when calculating repayment income, making it effectively HECS-neutral. Novated leases behave similarly — the taxable income reduction is offset by the reportable fringe benefit amount added back into repayment income.
Voluntary HECS repayments are not tax deductible. They reduce your debt balance only, not your taxable income or tax payable.
Repayment Income vs Taxable Income: The Key Distinction
A source of persistent confusion is the difference between taxable income and repayment income. They are not the same figure, and using the wrong one leads to incorrect repayment estimates.
Your repayment income is your taxable income plus the following add-backs:
- Reportable fringe benefits amounts (for example, from a novated lease or employer-provided car)
- Reportable employer super contributions (salary sacrificed into super)
- Total net investment losses (where investment deductions exceed investment income)
- Exempt foreign employment income
The practical implication: if you earn $80,000 in salary and salary sacrifice $10,000 into super, your taxable income is $70,000 — but your repayment income for HECS purposes is $70,000 plus the $10,000 reportable super contribution = $80,000. Your HECS repayment is calculated on $80,000, not $70,000.
Similarly, if you have a novated lease generating a $12,000 reportable fringe benefit and your taxable income is $75,000, your repayment income is $87,000.
Your employer withholds an estimate of your HECS repayment from each pay cycle based on the income information you provide. The final reconciliation happens when you lodge your tax return, at which point any over- or under-withholding is settled as part of your assessment.
HECS Debt Overseas: Your Obligations Do Not Pause
Australian citizens and permanent residents with HECS-HELP debt remain liable for compulsory repayments regardless of where they live. If you move overseas for more than six months and your worldwide income — converted to Australian dollars — exceeds the repayment threshold, you are required to lodge an overseas assessment and make repayments.
You must notify the ATO before you depart by updating your contact and residency details through myGov. Each year, you lodge a worldwide income declaration with the ATO. If your worldwide income exceeds $67,000 (for 2025-26), a compulsory repayment applies. Indexation on your balance continues regardless of whether you lodge or where you live.
Non-lodgement is treated as $0 income for repayment purposes — meaning no compulsory repayment is assessed — but indexation still accumulates on the balance. Over time, a non-lodging overseas borrower can end up with a debt that grows larger every year without any compulsory repayments reducing it. Voluntary repayments can be made at any time via ATO online services, regardless of country of residence.
FAQ
What is the HECS repayment threshold for 2025-26?
The minimum HECS-HELP repayment threshold for 2025-26 is $67,000 in repayment income. This is a significant increase from $54,435 in 2024-25, and was part of the broader package of student loan reforms introduced from 1 July 2025. If your repayment income is $67,000 or below, no compulsory repayment applies for the year — regardless of how large your debt is.
How do I calculate my HECS repayment for 2025-26?
Under the 2025-26 marginal system, calculate the amount of your repayment income above $67,000. Multiply that amount by 15 cents. For example, if your repayment income is $85,000, the calculation is: ($85,000 − $67,000) x $0.15 = $2,700. If your income exceeds $125,000, a higher band applies: $8,700 plus 17 cents on the amount above $125,000 up to $179,285. Above $179,285, 10% of your total repayment income applies. Use the Dolaro HECS-HELP Repayment Calculator for a quick result.
What is the difference between taxable income and HECS repayment income?
Repayment income is broader than taxable income. It includes your taxable income plus reportable fringe benefits (from novated leases or employer-provided cars), reportable employer super contributions (salary sacrifice into super), net investment losses, and exempt foreign employment income. Using taxable income alone will underestimate your HECS repayment.
Did HECS debts get reduced in 2025?
Yes. In August 2025, the Australian Government applied a one-off 20% reduction to all HECS-HELP and other student loan balances as at 1 June 2025, before that year's indexation. According to the Department of Education, this benefited over 3 million Australians and removed over $16 billion in student debt. The reduction was applied automatically by the ATO — no application was required. For an average debt of approximately $27,600, roughly $5,520 was wiped from the balance.
What is the HECS indexation rate for 2026?
The 1 June 2025 indexation rate was 3.2%, confirmed by the ATO. The 1 June 2026 rate will be set at the lower of the CPI or WPI for the relevant measurement period and announced by the ATO in late May 2026. Based on current RBA and ABS data, the rate is expected to fall between 2.5% and 3.6%. The indexation cap — lower of CPI or WPI — has applied since 1 June 2023.
Should I make a voluntary HECS repayment before 1 June 2026?
Making a voluntary repayment before 1 June reduces the balance on which indexation is calculated, providing a guaranteed return equal to the indexation rate on the amount paid. Whether this is better than investing depends on the indexation rate versus your expected after-tax investment return. With indexation likely in the 2.5%–3.6% range and diversified share portfolios historically returning 4%–5% after tax, the investment case is generally stronger for most borrowers — but those close to clearing their debt entirely may benefit from paying it off before 1 June to avoid one more year of indexation. Voluntary repayments are not tax deductible.
Does salary sacrifice reduce my HECS repayment?
No. The ATO adds salary-sacrificed employer super contributions back as "reportable employer super contributions" when calculating repayment income. Novated leases similarly generate a reportable fringe benefit that is added back. The net effect of most salary sacrifice strategies on HECS repayment income is negligible. Use salary sacrifice for its genuine superannuation or income tax benefits, not as a mechanism to reduce HECS repayments.
What happens to my HECS debt if I move overseas?
Your HECS-HELP debt obligation does not pause if you leave Australia. If your worldwide income — converted to AUD — exceeds the repayment threshold, compulsory repayments apply. You must notify the ATO before departure and lodge an annual worldwide income declaration. Indexation on your balance continues regardless of where you live or whether you lodge. Voluntary repayments can be made from overseas at any time through ATO online services.
What happens to HECS debt when you die?
HECS-HELP debt is written off upon the borrower's death. It does not transfer to your estate, partner, children, parents, or any other party. The ATO closes the account and the outstanding balance is extinguished. This is one of the features that fundamentally distinguishes HELP loans from commercial debt.
When is HECS repayment threshold indexed?
The minimum repayment threshold is indexed annually. For 2025-26 it was $67,000. For 2026-27 it has been indexed to $69,528. Under the legislation, the threshold is indexed each year but can never increase by a rate exceeding wage growth — the same principle that applies to the WPI cap on debt indexation.
Final Word
The HECS-HELP system that applies from 2025-26 is materially different from the one that preceded it. The 20% debt reduction, the higher $67,000 threshold, the shift to a marginal repayment model, and the indexation cap have collectively produced lower repayments and slower debt growth for most Australians with student loans. If you have not reviewed your balance or repayment estimate since the reforms took effect, now is the time.
The key numbers for 2025-26: threshold at $67,000, 15 cents per dollar above that up to $125,000, and indexation applied on 1 June at the lower of CPI or WPI. For 2026-27, the threshold rises to $69,528.
To calculate your exact annual and fortnightly HECS repayment based on your repayment income, use the Dolaro HECS-HELP Repayment Calculator.
This article is general information only and does not constitute financial, legal or tax advice. Always verify current rates and thresholds with the relevant government authority and seek advice from a qualified professional before making financial decisions.