HECS-HELP: How Australian Student Loans Work
HECS-HELP is the Australian government loan scheme that covers the tuition cost of a Commonwealth-supported university place. It is an income-contingent loan: you repay nothing until your income passes a threshold, repayments are made automatically through the tax system, and the balance is indexed to inflation rather than charged interest.
2 min read · Updated June 2026
HECS-HELP is the cheapest debt most Australians will ever hold. There is no interest — instead the balance is indexed each year to keep pace with inflation (historically CPI; recent reform caps indexation at the lower of CPI and the Wage Price Index). In low-inflation years this is close to free money; in high-inflation years the indexation can be substantial, which made the debt politically contentious in 2023-24.
Repayments are income-contingent and compulsory once your income exceeds the minimum threshold (around $54,000-$56,000 depending on the year). You repay a percentage of your total income — starting near 1% and rising in steps to 10% for high earners — withheld through PAYG. Below the threshold you repay nothing, which is why HECS-HELP is considered low-risk debt: it never forces repayments you can't afford.
Because the debt is interest-free and only indexed, the conventional wisdom is to NOT rush voluntary repayments — your money usually does better invested or put toward a mortgage (which charges real interest) than retiring an indexation-only debt. The exception is right before the annual indexation date, when a voluntary payment avoids that year's indexation on the amount paid.
HECS-HELP debt affects borrowing capacity. Lenders count your compulsory repayments as a recurring expense when assessing a mortgage, so a large balance can reduce how much you can borrow for a home even though the debt itself is cheap. This is the one scenario where paying it down early can have a concrete financial payoff beyond the indexation math.
The debt is wiped on death and isn't inherited, and it doesn't appear on your credit file the way commercial debt does. For budgeting, treat the compulsory repayment as a fixed payroll deduction — it reduces take-home pay but isn't a debt you actively manage month to month like a credit card or personal loan.
Richify factors your compulsory HECS-HELP repayment into your real take-home cash flow and models whether a voluntary repayment before the indexation date beats investing the same money — so you make the call on numbers, not vibes.
