How HECS-HELP Repayments Work
How HECS-HELP repayments work in FY2025-26: the $54,435 threshold, 1%-10% repayment rates, and the June 1 indexation date that grows your balance.
That extra line on your payslip (the summary of your pay) is HECS-HELP — Australia collecting on your student loan. It's the most polite debt you'll ever owe: no interest, no bills, no repayments until your income passes a set threshold.
But one date — June 1 — quietly grows the balance every year, and most graduates have never heard of it.
The line you don't cross until $54,435
For FY2025-26 (the tax year running July 2025 to June 2026), repayments only kick in once your income passes $54,435. Earn less and you repay nothing that year — the debt just sits there.
Above the threshold, you repay a slice of your income, starting at 1% and climbing to 10% as you earn more.
It never sends you a bill
You never get a bill. When you start a job, you tick the HELP debt box on your tax form (the tax file number declaration), and your employer holds back a little extra from each pay.
That extra amount is an estimate. Your real repayment is worked out when you lodge (send in) your tax return — if too much was held back, the difference comes back in your refund.
- Tick the HELP debt box when you start a new job
- Extra amounts come out of each pay automatically
- The real repayment is worked out at tax time
- If too much was held back, it comes back in your refund
The June 1st haircut
HECS charges no interest, but on June 1 each year your balance gets indexed. Indexation means the loan grows with inflation, so the debt keeps pace with the cost of living.
The annoying part: money taken from your pay through the year only comes off your balance after you lodge your return. So the June 1 bump can hit a balance that doesn't yet show a cent of what you've already paid.
⚠️The trap
The June 1 inflation bump lands before the money taken from your pay is knocked off your balance. You can be growing and shrinking the same debt at once.
Jumping the queue with voluntary repayments
You can make voluntary repayments to the ATO (the tax office) any time, and they reduce your balance immediately — no waiting for tax time. Pay before June 1 and a smaller balance gets indexed.
Should you? HECS is the cheapest debt most people will ever hold. If the balance bothers you, pay it down; otherwise savings, super (your retirement fund) or a house deposit often come first.
💡Quick win
If you're going to make a voluntary repayment anyway, do it before June 1. Same money, smaller balance when the inflation bump lands.
What to actually do about it
The system runs itself: nothing owed below $54,435, automatic deductions above it, rates scaling from 1% to 10% with your income.
Your entire to-do list: tick the HELP box with your employer, and remember June 1 if you're ever tempted to pay extra.
FAQ
Do I pay HECS if I earn under the threshold?
No. Earn under $54,435 in FY2025-26 and you repay nothing that year. Your balance still gets its June 1 inflation bump, but nobody asks you for money.
Does HECS-HELP charge interest?
No interest — but the balance gets an inflation bump (indexation) on June 1 each year, so the debt does grow over time if you're not paying it down.
Can I pay my HECS debt off early?
Yes. Voluntary repayments to the ATO reduce your balance immediately, any time you like. Pay before June 1 and a smaller balance gets hit by the inflation bump.
Run your own numbers
Sources: figures checked against ATO published rates and thresholds for FY2025-26 at the review date. See how we check our numbers.
⚠️ General information only — not tax or financial advice. Figures relate to FY2025-26 unless stated otherwise.