🎓 Your HECS-HELP Details
📋 Repayment Calculation Breakdown
📈 Year-by-Year Payoff Timeline
🟢 Green row = debt fully paid off
| Year | Opening Balance | Compulsory Repayment | Indexation Added | Voluntary Payment | Closing Balance |
|---|
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HECS-HELP in Australia 2025: Everything You Need to Know About the New System
Australia's student loan system underwent its biggest reform in decades in 2025. A 20% reduction was applied to all outstanding HELP debts, and the entire repayment calculation method was overhauled. If you graduated more than a few years ago and haven't revisited how your HECS works, there's a good chance your repayments are different to what you expect — and the new system is almost certainly more favourable for most graduates.
The Big Changes — What Happened in 2025
1. 20% Debt Reduction (July 2025)
The Higher Education Legislation Amendment (20% Reduction of HELP Debts) Act 2025 passed the Senate on 31 July 2025. The ATO automatically applied a 20% cut to every outstanding balance across all HELP-family loans — HECS-HELP, FEE-HELP, OS-HELP, SA-HELP — as they stood at 1 June 2025. No application was required. If you had $35,000 owing, it became $28,000 overnight.
2. New Marginal Repayment System (From 1 July 2025)
The old system calculated repayments as a flat percentage of your entire repayment income once you crossed a threshold. The new system is marginal — like income tax brackets. You only repay on income above each threshold. This significantly reduces repayments for most graduates, particularly those in the lower brackets.
Old vs New — Example: On $80,000 income under the 2024-25 system, the 4.0% rate applied to the full $80,000 = $3,200/year. Under the new 2025-26 marginal system, you pay 15c on every dollar above $67,000: ($80,000 − $67,000) × 15% = $1,950/year. That's $1,250 less per year — without changing anything about your income.
2025-26 HECS-HELP Repayment Thresholds (Marginal System)
| Repayment Income | Rate on Income Above Lower Threshold |
|---|---|
| Below $67,000 | Nil — no repayment |
| $67,001 – $125,000 | 15c per dollar above $67,000 |
| $125,001 – $160,000 | $8,700 + 17c per dollar above $125,000 |
| $160,001+ | $14,650 + 10c per dollar above $160,000 |
Note: These thresholds apply to "repayment income" which includes taxable income plus reportable fringe benefits, reportable super contributions, net investment losses, and exempt foreign employment income.
How HECS Indexation Works
HECS-HELP does not charge interest. Instead, the balance is indexed on 1 June each year to the lower of the Consumer Price Index (CPI) and the Wage Price Index (WPI). This keeps the real value of the debt constant over time — you are not paying interest, but the nominal balance does grow with inflation.
Key points about indexation:
- Indexed on 1 June — compulsory repayments made before this date reduce the balance before indexation is applied
- 2025 indexation rate: approximately 4.7%
- WPI cap introduced to limit indexation in high-inflation years
- If your income grows faster than indexation, your debt-to-income ratio shrinks naturally over time
Should You Make Voluntary HECS Repayments?
This is one of the most common personal finance questions for Australian graduates. The answer depends on your situation:
Reasons to make voluntary repayments:
- You have no higher-interest debt (credit cards, personal loans) — HECS indexation of 3–5% is lower than most debt rates
- You are applying for a mortgage — lenders subtract compulsory HECS repayments from your assessable income, reducing your borrowing capacity
- You want to simplify your finances and remove the HECS deduction from your weekly pay
- You believe future indexation will be high and want to minimise the balance subject to it
Reasons NOT to make voluntary repayments:
- You have credit card or personal loan debt at higher rates — pay those off first
- You could invest the money in index funds and likely earn more than the indexation rate over time
- Your income is growing quickly — the compulsory repayments will accelerate naturally
- You are in the early years and the balance may qualify for further government reductions
The bottom line: HECS-HELP is among the cheapest debt available to Australians. Unless you are specifically trying to increase mortgage borrowing capacity, most financial advisers recommend prioritising higher-interest debt and investment returns over voluntary HECS repayments.
This calculator is for general information only based on 2025-26 ATO rates. Actual repayments are assessed at tax time and may differ. Check your current balance at ato.gov.au via myGov. Not financial or tax advice.