Understanding HECS-HELP Repayment & Indexation
HECS-HELP is the Australian Government's higher education loan scheme that helps students pay their university fees. Repayments are calculated based on your income and are automatically withheld by your employer. Additionally, your HECS debt is indexed annually on June 1st to maintain its real value.
How Repayments Work
For the 2025-26 financial year, you only make compulsory HECS-HELP repayments when your "Repayment Income" exceeds the threshold of $56,000. The repayment rate increases progressively with your income, scaling up to 10% for incomes over $150,000. These repayments are mandatory and are deducted from your pay by your employer.
Annual Indexation
Each year on June 1st, your outstanding HECS-HELP balance is increased by the Consumer Price Index (CPI) to adjust for inflation. This indexation ensures the value of your debt is not eroded over time. The indexation rate varies each year based on inflation data. For 2025-26, the expected rate is around 4.0-4.5% (this calculator uses a default of 4.2% which you can adjust).
Fairer HECS Changes from 2026
From January 1, 2026, the Australian Government is introducing "Fairer HECS" reforms. These changes include a cap on indexation at the lower of the actual CPI or the Wage Price Index (WPI) plus 1%, providing better protection against high inflation. Additionally, any debt older than 10 years will not be indexed. These reforms will help reduce the burden of indexation on graduates.
Important Notes
This calculator provides estimates based on current HECS-HELP arrangements. The actual indexation rate is set by the Australian Government each year. Compulsory repayments are calculated on your "Repayment Income" which may differ from your taxable income. For official advice and the most up-to-date information, visit the ATO website or studyassist.gov.au.