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§ 01 — HECS

When does your HECS debt disappear?

Your employer withholds a mandatory slice of your salary each year — but HECS indexation keeps growing the balance. Enter your debt and salary to see the payoff timeline, and what voluntary repayments actually save you.

Updated · 1 Jul 2025·Source: ATO / StudyAssist·Read · 3 min

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A$
A$
A$

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The result

Years to pay off

18

compulsory only

With voluntary extras

18

Annual compulsory
$2,250
Repayment rate
3.0%
Indexation saved
$0

§ Debt balance over time

Projections assume 4% annual HECS indexation (CPI proxy) and 2025–26 repayment thresholds. Actual indexation varies each June. Not financial advice.

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How HECS repayment works

HECS/HELP is Australia's income-contingent student loan — you only repay when your income crosses the threshold, and the balance is indexed to CPI each June.

  1. 1. The repayment threshold. Compulsory repayments kick in once your repayment income exceeds ~$54,435 (2025–26). Below that, nothing is withheld.
  2. 2. Tiered repayment rates. The rate rises from 1% to 10% of your total income in brackets set each year by the ATO — not just on the slice above the threshold.
  3. 3. Annual indexation. On 1 June each year, your outstanding balance is indexed to CPI. In recent years this has been 3–7%. Voluntary repayments made before June reduce the amount indexed.
  4. 4. No interest, but growth is real. Unlike a bank loan, HECS doesn't charge interest — but indexation has the same economic effect on your real balance.
  5. 5. Voluntary repayments. You can pay as much as you like at any time via myGov. There's no bonus for doing so any more (the 5% bonus was abolished in 2012), but you avoid future indexation on whatever you repay.

§ Letters & replies

HECS questions, answered.

The questions Australians most often ask about HECS/HELP repayments and voluntary payments.

Should I make voluntary HECS repayments?+ open

It depends on the indexation rate vs your alternative returns. If CPI indexation runs higher than what you'd earn in a high-interest savings account (currently common), voluntary repayments make sense — especially timed before 1 June to avoid that year's indexation applying to the repaid amount.

Does HECS repayment come out of my payslip?+ open

Yes. If you notified your employer you have a HECS debt (via your Tax File Number Declaration), they withhold the relevant percentage as part of your PAYG tax. It flows through your tax return each year and is credited against your actual debt.

What happens to HECS if I go overseas?+ open

Since 2017, Australians working overseas with a HECS debt must submit an Overseas Travel Notification and pay compulsory repayments if their worldwide income exceeds the threshold. The debt is also still indexed each June regardless of residency.

Is there a 5% voluntary repayment bonus?+ open

No. The 5% bonus was abolished in 2012. Voluntary repayments now reduce your balance dollar-for-dollar — there is no extra incentive, just the savings from avoiding future indexation on the repaid amount.

Next: the bigger picture

§ Take-home

Salary calculator

Your full take-home after income tax, Medicare, HECS and super.

§ Super

Salary sacrifice

Tax saved and super boosted when you sacrifice pre-tax salary.

§ Retirement

Super projection

Projected super balance at 60, 65 and 67 — with a 7% growth chart.