Inputs
From 1 July 2025, repayments use a marginal system: nothing on the first $67,000, then 15c per $1 from $67,000–$125,000, $8,700 + 17c per $1 from $125,000–$179,285, and 10% of total income above $179,286. "Repayment income" is taxable income plus reportable fringe benefits, reportable super, net investment losses and exempt foreign income. Applies to all study and training loans (HECS-HELP, FEE-HELP, VET, etc.).
How HECS-HELP repayment works
HECS-HELP is an income-contingent student loan: you repay only when your repayment income exceeds the threshold, which is $67,000 for 2025-26. From 1 July 2025 the system became marginal — like income tax, you pay the band rate only on income within that band, not a flat percentage of your whole income. This removed the old "cliff" where earning $1 more could trigger a large jump. On $80,000, repayment is 15% of the $13,000 above the threshold, or $1,950.
The debt carries no interest but is indexed each year (to the lower of CPI or wage growth). Your employer withholds extra tax during the year, and the ATO reconciles the actual amount when you lodge your return. A one-off 20% reduction was applied to most balances on 1 June 2025 before indexation.
FAQ
What is the 2025-26 threshold?
$67,000 of repayment income — below this, no compulsory repayment is required.
What is "repayment income"?
Taxable income plus reportable fringe benefits, reportable super contributions, net investment losses and exempt foreign income — often higher than your salary alone.
Is HECS interest-free?
There is no interest, but the balance is indexed annually to the lower of CPI or the Wage Price Index to keep pace with inflation.
Should I make voluntary repayments?
Voluntary repayments reduce the balance before indexation, but consider whether other debts or saving/investing offer better value first.