HECS Hangover

Sign in to my.gov.au, open the Australian Taxation Office linked service (link it once with your TFN if you haven't), and go to Loan accounts. Your current HECS-HELP balance is shown there along with the indexation history and all prior compulsory and voluntary repayments.

Without a myGov account, call the ATO on 13 28 61 (Mon–Fri, 8am–6pm) with your TFN — they can read your balance over the phone. Your most recent Notice of Assessment also shows the indexed opening balance for the current financial year.

Compulsory repayments have been calculated on a MARGINAL basis since 1 July 2025 — that is, from the 2025-26 income year, not 2026-27. You repay a percentage only of the income ABOVE the minimum threshold, not on your whole income.

The FY2026-27 schedule is: nil up to $69,528; 15c per dollar between $69,528 and $129,717; then $9,028.35 plus 17c per dollar between $129,717 and $186,050; and 10% of your total repayment income once it exceeds $186,050. The FY2025-26 schedule — the year most people are lodging a return for right now — is: nil up to $67,000; 15c per dollar between $67,000 and $125,000; then $8,700 plus 17c per dollar between $125,000 and $179,285; and 10% of total repayment income above $179,285.

This replaced the old system where a single rate applied to your entire income, so the old 'HECS cliff' — where earning $1 more could cost hundreds — is gone below the top threshold. Example: on $80,000 in FY2026-27 you repay ($80,000 − $69,528) × 15% = about $1,571 for the year, an effective rate of just under 2%.

You start making compulsory repayments through the tax system once your Repayment Income exceeds the minimum threshold — $69,528 for the 2026-27 financial year (up from $67,000 in 2025-26). Repayment Income is broader than taxable income: it adds back reportable fringe benefits, reportable employer super contributions, net investment losses, and exempt foreign employment income.

Under the marginal system, in force since 1 July 2025, your repayment is a percentage of the income above the threshold — not of your whole income — so crossing the threshold no longer triggers a repayment on every dollar you earn.

Indexation is applied once a year on 1 June, before that year's tax-time compulsory repayment is taken off. If your balance is $30,000 on 31 May and indexation is 2.8% (the 2026 rate), it becomes $30,840 on 1 June.

Voluntary payments made before 1 June reduce the amount that gets indexed — paying $1,000 down on 30 May saves you the indexation on that $1,000. Compulsory repayments from your latest tax return don't reduce indexation in that same year because they're applied after lodgement, well after 1 June.

HECS-HELP debts are indexed annually on 1 June. Since 2023, indexation is capped at the lower of CPI or the Wage Price Index (WPI), and the cap was applied retroactively to balances from 2023 onward — a change that benefitted anyone who held a balance over 2023 and 2024.

The ATO publishes the rate before 1 June each year. Recent rates: 7.1% (2023, before the cap, since revised down to 3.2%); 4.0% (2024); 3.2% (2025); and 2.8% (2026 — the lowest since 2021).

Confirm the current-year rate on ato.gov.au before relying on it.

Taxable income is what you pay income tax on. Repayment Income (used to calculate HECS) adds four items back in: (1) reportable fringe benefits — salary-packaged car, novated lease, FBT-included benefits; (2) reportable employer super contributions (RESC) — i.e. salary sacrifice into super; (3) net investment losses (negative gearing); (4) exempt foreign employment income.

Most PAYG earners with no investment property or salary sacrifice will have Repayment Income ≈ taxable income. This is why salary sacrificing into super doesn't usually reduce your HECS bill — the sacrificed amount is added back in for the HECS calculation.

Yes — voluntary payments can be made any time through myGov/ATO via BPAY or direct credit. There used to be a 5% bonus for voluntary payments over $500, but this was abolished in 2017.

Voluntary payments still reduce your debt faster and, more importantly, reduce next year's indexation if made before 1 June. There's no minimum or maximum amount.

Voluntary payments don't replace your compulsory repayments at tax time — they reduce them only by lowering the balance the compulsory repayment is calculated against.

If you're going to pay anyway, timing it BEFORE the 1 June indexation date is worth it: a voluntary payment that clears your loan account before 1 June reduces the balance that gets indexed, so it saves you indexation on that amount for the year — a risk-free return equal to the indexation rate (2.8% in 2026). Allow 3–5 business days for the payment to process, so aim for late May.

Whether to pay at all (versus investing the cash) is a separate question: with indexation now low at 2.8% and long-run after-tax investment returns nearer 7%, investing often has the higher expected return — but pre-paying is risk-free, improves your home-loan borrowing capacity, and gives certainty. A common rule: prioritise a voluntary payment (timed before 1 June) if you're about to apply for a mortgage, have no higher-interest debt, and your super is on track; otherwise the maths usually favours investing.

Note that salary-sacrificed super does NOT reduce HECS Repayment Income, so it won't lower your compulsory repayment.

Yes. When you apply for a home loan, lenders treat your compulsory HECS repayment as an ongoing monthly expense, reducing the loan amount you qualify for.

Under the FY2026-27 marginal system, a $100,000 earner repays ($100,000 − $69,528) × 15% = about $4,571 a year (roughly $381 a month, an effective rate of ~4.6%) — which can still reduce your maximum borrowing by tens of thousands of dollars depending on the lender's serviceability calculation. Paying down HECS therefore improves borrowing capacity, but it has to be weighed against the indexation savings and what else the money could do.

HECS-HELP debt is written off upon death. It does not pass to your estate, family members, or anyone else.

It is also written off if you become permanently incapacitated under the Permanent Disability provisions — apply through the ATO with supporting medical evidence. There's no general hardship write-off for HECS, but the ATO can defer compulsory repayments for one year on application if making the repayment would cause serious financial hardship.

It depends on the indexation rate vs. expected investment returns, plus non-financial factors. With 2026 indexation at 2.8% and a realistic long-term after-tax return of ~7% in a diversified portfolio, the math usually favours investing.

However: (1) reducing HECS improves borrowing capacity, useful if buying a home soon; (2) provides psychological certainty; (3) the new marginal system already removed the old 'cliff', so the case for pre-paying purely to dodge a threshold jump is weaker than before. Common framework: prioritise paying HECS down only if you're about to apply for a home loan, you have no other debt, and your super is on track.

Under the lower-of-CPI-or-WPI cap, indexation is usually below the expected return on investing the same dollars.

Compulsory HECS repayments are a tax obligation calculated from your Repayment Income and cannot be refunded retroactively. Voluntary repayments can effectively go below zero balance (you'd have to actively overpay), and the ATO refunds any credit on your HECS-HELP account once the balance is fully paid off.

If your final compulsory repayment over-pays your remaining balance, the excess is automatically refunded with your tax return that year — no separate claim needed.