If you’re one of the 3 million Australians carrying HECS-HELP debt, 2025 brought the biggest relief in the program’s 30-year history. The Albanese government’s reforms slashed student debt by 20% for eligible borrowers and changed how indexation works forever. But here’s what most people don’t know: understanding these changes could save you thousands of dollars over the life of your loan.
At IndexationNews com, we’ve tracked every policy shift, analyzed the numbers, and spoken with education financing experts to bring you the complete picture. Whether you’re a recent graduate, mid-career professional, or parent planning for your child’s education, this guide breaks down everything you need to know about HECS-HELP indexation in 2025-26.
The financial burden of student debt has overwhelmed many Australians, with some graduates seeing their balances grow faster than they could repay them. These reforms aim to provide meaningful relief and restore intergenerational fairness to the higher education system. Let’s dive into what changed, who benefits, and how you can make these reforms work for you.
Table of Contents
Breaking News: 20% HECS Debt Reduction Explained
Latest Updates: What the Albanese Government Announced
In one of the most significant education policy changes since HECS was introduced by designer Bruce Chapman in 1989, the Australian government announced a retroactive 20% reduction in HELP loan balances. Education Minister Jason Clare called it “the most substantial debt forgiveness program in Australian history.”
Here’s what happened: On June 1, 2023, the Australian Taxation Office automatically applied credits to eligible HELP debt accounts. No application was needed. If you had a HECS-HELP balance on that date, you likely received this reduction. The average borrower saved approximately $5,520, though individual amounts varied based on total debt.
This wasn’t just a one-time reduction. The government simultaneously changed how indexation is calculated moving forward, switching from the Consumer Price Index (CPI) to the lower of CPI or the Wage Price Index (WPI). This structural change addresses the fundamental problem that caused many borrowers’ debts to grow faster than their incomes during the high-inflation period of 2022-2023.
The reforms also tackled the repayment threshold issue. Starting from the 2024-25 financial year, the minimum repayment income increased to $54,435 (later adjusted to $67,000 for 2025-26), and the government introduced a marginal repayment system similar to income tax brackets. This means you only pay the higher repayment rate on income above each threshold, not on your entire income.
Who Benefits from the HECS Debt Relief
The 20% HECS debt reduction benefited approximately 3 million current and former students across Australia. But the impact wasn’t equal for everyone. Here’s who gained the most:
- Recent Graduates (2015-2023): If you graduated during the high-indexation years, especially 2022-2023 when rates hit 7.1%, you likely saw substantial relief. A graduate with $40,000 in debt from a Bachelor’s degree received around $8,000 in credits.
- Postgraduate Students: Those with Masters or PhD-level HELP debts, which can exceed $100,000, received the largest dollar-value reductions. A borrower with $120,000 in debt saved $24,000 instantly.
- Low-Income Earners: People earning below the repayment threshold but watching their debt grow due to indexation finally got breathing room. The debt reduction combined with lower future indexation rates means their balances will stabilize.
- Mid-Career Professionals: Those who’ve been slowly paying down their Commonwealth Supported Place loans for years saw their remaining balances drop by 20%, potentially reducing their payoff timeline by several years.
- Regional and Remote Students: Students from outside major cities often accumulate higher HELP debts due to accommodation costs and longer degree completion times. They benefited proportionally more from the flat percentage reduction.
Who didn’t qualify? If you fully repaid your HELP loan before June 1, 2023, you unfortunately don’t receive retroactive credits. The reduction only applied to outstanding balances on the effective date.
How to Check Your HECS Balance and Confirm Your Reduction
Verifying your HECS-HELP balance and the applied reduction takes just a few minutes through official Australian Taxation Office channels. Here’s exactly how to do it:
Method 1: myGov Account
- Log into your myGov account at my.gov.au
- Link or access the Australian Taxation Office
- Navigate to “HELP debt” or “Study and training support loans”
- View your current balance and transaction history
- Look for a credit entry dated June 1, 2023, showing the 20% reduction
Method 2: ATO App
- Download the ATO app on your smartphone
- Sign in with myGov credentials
- Select “Study and training loans”
- Check your current balance and recent adjustments
Method 3: Annual Tax Assessment Your notice of assessment issued after lodging your tax return includes your HELP debt balance. This shows your opening balance, any repayments made, indexation applied, and the debt reduction credit.
What to Look For:
- Your balance should show a significant drop on June 1, 2023
- Transaction history should list “20% indexation credit”
- Future indexation should be calculated using the lower WPI method
Received ATO Text Notifications? The Australian Taxation Office sent SMS notifications to many HELP debtors informing them of the debt reduction. If you received this message, it confirms your eligibility. However, not receiving a text doesn’t mean you didn’t get the reduction—check your myGov account to confirm.
What If Something Looks Wrong? If your balance doesn’t reflect the 20% reduction or you believe there’s an error, contact the ATO directly through:
- myGov inbox (most efficient method)
- ATO phone line: 13 28 61
- Tax agent or financial advisor who can investigate on your behalf
Keep records of your balances before and after June 1, 2023, for your personal financial planning. This helps you understand how much the reforms saved you and plan your voluntary repayment strategy accordingly.
HECS-HELP Indexation Rate for 2025-26
Current Rate and What It Means for Your Student Loan
The HECS-HELP indexation rate for 2025-26 sits at 3.2%, significantly lower than the painful 7.1% applied in 2023. This rate applies to all outstanding HELP debt balances as of June 1, 2025. For context, if you had a $30,000 balance, indexation added $960 to your debt over the year.
But here’s what makes 2025-26 different: this is the second year under the new calculation method that uses the lower of the Consumer Price Index (CPI) or the Wage Price Index (WPI). The government designed this change to ensure your debt doesn’t grow faster than typical wage increases, which was happening during the high-inflation period of 2022-2023.
The 3.2% rate for 2025-26 was based on the Wage Price Index, as it came in lower than the Consumer Price Index during the measurement period. This represents meaningful financial relief compared to the CPI-only method that would have resulted in a higher rate.
Understanding what this means for your specific situation depends on your balance and income:
- Lower balances ($10,000-$30,000): Indexation adds $320-$960 annually
- Medium balances ($30,000-$60,000): Indexation adds $960-$1,920 annually
- Higher balances ($60,000+): Indexation adds $1,920+ annually
The key insight: if your compulsory repayments exceed the indexation amount, your debt decreases. If indexation exceeds your repayments, your balance grows despite making payments. This is why the reforms matter so much for low-income earners.
How HECS Indexation Is Calculated: CPI vs WPI Explained
Before 2023, HECS-HELP indexation used a straightforward but problematic formula: your debt increased annually by the Consumer Price Index (CPI) measured each March. When inflation spiked to 7.1% in 2023, so did indexation rates, causing massive debt increases that outpaced wage growth.
The new system introduced by the Albanese government fundamentally changed this calculation. Starting from June 1, 2023, indexation uses the lower of CPI or WPI, measured as follows:
Consumer Price Index (CPI):
- Measures the cost of a basket of goods and services
- Reflects general inflation in the economy
- Calculated by the Australian Bureau of Statistics
- Highly sensitive to energy, housing, and food costs
- More volatile during economic disruptions
Wage Price Index (WPI):
- Measures changes in wages and salaries
- Reflects actual income growth for working Australians
- More stable and typically grows more slowly than CPI
- Better represents borrowers’ ability to repay debt
- Less affected by supply chain shocks or commodity prices
The Australian Taxation Office applies whichever index is lower on June 1 each year. This protects borrowers during high-inflation periods while still allowing the Commonwealth to maintain the real value of loans during normal economic times.
Why This Change Matters: During 2022-2023, CPI hit 7.1% while WPI remained around 3.7%. Under the old system, all HELP debts increased by 7.1%. Under the new system, they would have increased by only 3.7%—a difference of thousands of dollars for most borrowers.
This policy change represents a philosophical shift toward linking education debt more closely to borrowers’ capacity to pay rather than general economic inflation. It acknowledges that HELP is an income-contingent loan system where repayments are tied to earnings, so indexation should be too.
Historical HECS Indexation Rates: Complete Comparison Table
Understanding where we’ve been helps contextualize where we are. Here’s the complete history of HECS-HELP indexation rates, showing the dramatic impact of recent reforms:
| Year | Indexation Rate | Calculation Method | Notable Events |
| 2015-16 | 1.5% | CPI only | Stable inflation period |
| 2016-17 | 1.3% | CPI only | Low inflation environment |
| 2017-18 | 1.9% | CPI only | – |
| 2018-19 | 1.8% | CPI only | – |
| 2019-20 | 1.8% | CPI only | Pre-COVID baseline |
| 2020-21 | 0.6% | CPI only | Pandemic deflationary period |
| 2021-22 | 3.9% | CPI only | Inflation begins rising |
| 2022-23 | 7.1% | CPI only | Highest rate in program history |
| 2023-24 | 4.7% | CPI only* | Last year before reform implementation |
| 2024-25 | 3.8% | Lower of CPI/WPI | First year of new system |
| 2025-26 | 3.2% | Lower of CPI/WPI | Current rate |
*The 2023-24 rate was applied before reforms took effect, but the 20% reduction credited in June 2023 more than offset this indexation for most borrowers.
Key Insights from the Data:
- The 7.1% Spike: The 2022-23 rate remains the highest in HECS-HELP history, driven by post-pandemic inflation. A borrower with $50,000 in debt saw it increase by $3,550 from indexation alone that year.
- Reform Impact: If the 2024-25 and 2025-26 rates had used the old CPI-only method, they would have been approximately 5.2% and 4.1% respectively. The new system saved borrowers 1.4% and 0.9% in those years.
- The 20-Year Perspective: Average indexation from 2005-2020 was around 2.3% annually. The recent high-inflation period was an anomaly that prompted the government’s intervention.
- Future Projections: Economic forecasters predict indexation rates will stabilize between 2.5-3.5% annually for the next 3-5 years as both CPI and WPI normalize after pandemic disruptions.
What This Means for Your Financial Planning:
If you’re deciding whether to make voluntary repayments, compare the indexation rate to your alternative investment returns. With indexation at 3.2%, paying down HECS-HELP early is like getting a guaranteed 3.2% return on that money—tax-free, since you’re avoiding future debt growth.
However, if you can invest that money and earn higher returns (like in a diversified portfolio or paying down higher-interest consumer debt), it might make more sense to keep your money working elsewhere and stick with compulsory repayments only.
New Repayment Threshold: $67,000 for 2025-26
How the HECS Repayment Income Threshold Works
The repayment income threshold is the magic number that determines when you start paying back your HECS-HELP debt. For the 2025-26 financial year, that threshold sits at $67,000 in repayment income. This means if you earn less than $67,000, you make zero compulsory repayments on your student loan. Earn $67,001 or more, and the repayment system kicks in.
But what exactly is “repayment income”? It’s not just your salary. The Australian Taxation Office defines repayment income as your taxable income plus any:
- Total net investment losses
- Reportable fringe benefits
- Reportable super contributions
- Exempt foreign employment income
This broader definition means someone with a $60,000 salary but $10,000 in reportable fringe benefits would have a $70,000 repayment income and be required to make HELP loan repayments.
The $67,000 threshold for 2025-26 represents a significant increase from previous years. In 2022-23, the threshold was just $48,361. This substantial jump reflects the government’s commitment to easing the financial burden on recent graduates and lower-income earners who were being forced to repay their loans while struggling with cost of living pressures.
How Repayments Are Triggered:
Your employer doesn’t automatically deduct HELP repayments from your pay like they do with income tax (though they may withhold extra tax to cover expected HELP obligations). Instead, your repayment obligation is calculated when you lodge your annual tax return. If you earn above the threshold, the Australian Taxation Office calculates your repayment amount based on your total repayment income for the year and either:
- Takes it from your tax refund if you’re owed one
- Issues you a bill if you have a tax debt or no refund
- Adjusts your PAYG instalments for the next year to capture the repayment
Many people are surprised when they receive a tax bill or smaller refund than expected because they forgot to account for HELP repayments. Using the ATO’s online calculators during the year helps you estimate and prepare for this obligation.
Understanding the Marginal Repayment System
Here’s where the 2025 reforms made a game-changing difference: the introduction of a marginal repayment system for HECS-HELP debt. Before this change, crossing a repayment threshold meant your entire income was subject to the higher repayment rate. Now, like the income tax system, only the income above each threshold is taxed at the higher rate.
How It Works:
Under the marginal system, repayment rates are structured in brackets. For 2025-26, the system works as follows:
| Repayment Income | Repayment Rate | On Income Above |
| Below $67,000 | 0% | – |
| $67,000 – $78,000 | 1% | $67,000 |
| $78,001 – $89,000 | 2% | $78,000 |
| $89,001 – $100,000 | 3% | $89,000 |
| $100,001 – $112,000 | 4% | $100,000 |
| $112,001 – $126,000 | 5% | $112,000 |
| $126,001 – $142,000 | 6% | $126,000 |
| $142,001 – $151,000 | 7% | $142,000 |
| $151,001 – $162,000 | 8% | $151,000 |
| $162,001 – $175,000 | 9% | $162,000 |
| $175,001 and above | 10% | $175,000 |
Let’s illustrate with an example: Sarah earns $85,000 in repayment income in 2025-26.
Under the Old System: Her entire $85,000 would have been subject to the repayment rate for that bracket (approximately 2.5% at that level), resulting in a repayment of around $2,125.
Under the New Marginal System:
- $67,000 at 0% = $0
- $11,000 ($78,000 – $67,000) at 1% = $110
- $7,000 ($85,000 – $78,000) at 2% = $140
Total repayment: $250
Sarah saves $1,875 annually under the marginal system compared to the old approach. Over a decade of repayments, that’s nearly $19,000 saved, which goes toward actually reducing her principal balance instead of just servicing the repayment obligation.
Why This Matters:
The marginal system eliminates the “cliff effect” that previously penalized people who earned just slightly above a threshold. Under the old system, earning $1 more could trigger hundreds of dollars in additional annual repayments. Now, you only pay the higher rate on that additional dollar and any income above the threshold—a much fairer approach.
This reform also addresses the poverty trap concern raised by education economist Bruce Chapman, who designed the original HECS system. He noted that some workers were declining pay raises or reducing hours to avoid crossing repayment thresholds. The marginal system removes this perverse incentive, encouraging career advancement without financial penalty.
Real Savings Examples at Different Income Levels
Let’s break down exactly how much the new repayment threshold and marginal system save borrowers at various income levels. These examples use 2025-26 rates and compare the new system to how things worked in 2022-23.
Example 1: Recent Graduate – $70,000 Income
Grace is a 24-year-old teacher earning $70,000 with $45,000 in HECS debt.
2022-23 (Old System):
- Threshold: $48,361
- Repayment rate on full income: ~1.5%
- Annual repayment: $1,050
- After-tax impact: ~$900 less in pocket
2025-26 (New System):
- Threshold: $67,000
- Marginal repayment: 1% on $3,000 ($70,000 – $67,000)
- Annual repayment: $30
- Savings: $1,020 per year
Grace saves over $1,000 annually, which she can use for voluntary repayments, emergency savings, or living expenses. Over five years of her career, that’s $5,100 in savings.
Example 2: Mid-Career Professional – $95,000 Income
James is a 32-year-old engineer earning $95,000 with $28,000 remaining HECS debt.
2022-23 (Old System):
- Repayment rate on full income: ~3%
- Annual repayment: $2,850
2025-26 (New System):
- Marginal calculation:
- $0 on first $67,000
- $110 on next $11,000 (at 1%)
- $220 on next $11,000 (at 2%)
- $240 on remaining $6,000 (at 3%)
- Annual repayment: $570
- Savings: $2,280 per year
James saves enough annually to make a substantial voluntary repayment if he chooses, potentially clearing his debt years earlier than under the old system.
Example 3: High Earner – $130,000 Income
Priya is a 35-year-old lawyer earning $130,000 with $62,000 remaining HECS debt (postgraduate study).
2022-23 (Old System):
- Repayment rate on full income: ~6%
- Annual repayment: $7,800
2025-26 (New System):
- Marginal calculation across all brackets:
- Total annual repayment: $2,510
- Savings: $5,290 per year
Priya saves over $5,000 annually, which more than offsets the indexation on her debt ($1,984 at 3.2%). She can now make significant voluntary repayments and eliminate her debt faster.
Example 4: Below Threshold – $62,000 Income
Tom works in hospitality management earning $62,000 with $38,000 in HECS debt.
2022-23 (Old System):
- Threshold: $48,361
- Repayment rate: ~1%
- Annual repayment: $620
2025-26 (New System):
- Below $67,000 threshold
- Annual repayment: $0
- Savings: $620 per year
Tom benefits from the raised threshold, making no compulsory repayments while he builds his career. His debt still indexes at 3.2% ($1,216), but he can choose if and when to make voluntary repayments based on his financial situation.
The Bigger Picture:
Across all income brackets, the combination of the higher threshold and marginal system reduces annual repayment burdens by 40-70% for most borrowers. This represents billions of dollars in debt relief spread across millions of Australians, making higher education financing more sustainable and equitable.
The reforms particularly benefit women, who typically earn less than men throughout their careers and previously took longer to repay HELP debts. Indigenous Australians and students from regional areas also benefit disproportionately, as these groups often have lower average incomes despite similar education levels.
How Indexation Impacts Your Student Debt
Real-World Scenarios: What Happens to Your Balance
Understanding how indexation actually affects your HECS-HELP debt requires looking at complete scenarios that include both indexation and repayments. Let’s examine three detailed cases that illustrate how the 2025-26 system works in practice.
Scenario 1: New Graduate with Growing Debt
Background: Emma graduated in December 2024 with a Bachelor of Arts. She owes $32,000 and just started a marketing coordinator role earning $58,000.
June 1, 2025 – Indexation Applied:
- Opening balance: $32,000
- Indexation rate: 3.2%
- Amount added: $1,024
- New balance: $33,024
June 30, 2026 – After Tax Year:
- Repayment income: $58,000
- Repayment threshold: $67,000
- Compulsory repayment: $0 (below threshold)
Result: Emma’s balance increased by $1,024 this year due to indexation with no offsetting repayment. However, she’s building her career and expects a $10,000 raise next year, which will trigger repayments. The higher threshold gives her breathing room while she establishes financial stability.
Scenario 2: Mid-Career Professional Reducing Debt
Background: Michael is 29, working as an accountant earning $92,000. He has $41,000 remaining from his commerce degree and CPA studies.
June 1, 2025 – Indexation Applied:
- Opening balance: $41,000
- Indexation rate: 3.2%
- Amount added: $1,312
- New balance: $42,312
June 30, 2026 – After Tax Year:
- Repayment income: $92,000
- Marginal repayment calculation:
- $0 on first $67,000
- $110 on $67,000-$78,000
- $220 on $78,000-$89,000
- $90 on $89,000-$92,000
- Total compulsory repayment: $420
Plus: Michael made a $3,000 voluntary repayment in January 2026 (before indexation)
Result:
- Balance after indexation: $42,312
- Minus compulsory repayment: -$420
- Minus voluntary repayment: -$3,000
- Closing balance: $38,892
Michael reduced his debt by $2,108 this year ($41,000 – $38,892). His strategic voluntary repayment before the June 1 indexation date saved him from paying 3.2% indexation on that $3,000, a savings of $96.
Scenario 3: High Earner Rapidly Eliminating Debt
Background: Sophia is 34, a software developer earning $145,000. She completed a computer science degree and has $19,500 remaining in HELP debt.
June 1, 2025 – Indexation Applied:
- Opening balance: $19,500
- Indexation rate: 3.2%
- Amount added: $624
- New balance: $20,124
June 30, 2026 – After Tax Year:
- Repayment income: $145,000
- Marginal repayment calculation (across multiple brackets): $2,050
Plus: Sophia made a $10,000 voluntary repayment to clear the debt entirely
Result: Debt eliminated. No more indexation worries. Her high income and relatively small remaining balance made it financially optimal to clear the debt rather than let it continue growing at 3.2% annually.
Key Takeaways Across Scenarios:
- Below-threshold earners see debt growth from indexation with no offsetting repayments
- Modest earners may see slow debt reduction depending on how compulsory repayments compare to indexation
- High earners can rapidly eliminate debt through combination of compulsory and voluntary repayments
- Timing matters: Making voluntary repayments before June 1 avoids indexation on that amount
The Monthly vs Annual Impact Breakdown
Most people think about HECS-HELP in terms of annual indexation and repayments, but understanding the monthly impact helps with budgeting and financial planning. Here’s how to break it down:
Monthly Indexation Accumulation:
While indexation is applied once per year on June 1, the effective monthly accumulation can be calculated for planning purposes:
- 3.2% annual rate ÷ 12 months = 0.267% effective monthly rate
- $30,000 balance × 0.267% = $80 per month
- $50,000 balance × 0.267% = $133 per month
- $80,000 balance × 0.267% = $213 per month
These are the amounts your debt effectively grows each month if you make no payments. However, this isn’t compounding monthly—it’s a simple calculation to help you visualize the accumulation.
Monthly Repayment Obligations:
Compulsory repayments aren’t deducted monthly; they’re assessed annually through your tax return. However, you can estimate your monthly obligation for budgeting:
Example: $85,000 annual income
- Annual compulsory repayment: $250 (marginal system)
- Effective monthly obligation: $250 ÷ 12 = $21
Compare this to the monthly indexation accumulation ($133 on a $50,000 balance), and you see the debt would still grow by $112 monthly despite making compulsory repayments.
Monthly Voluntary Repayment Strategy:
Some borrowers prefer setting aside a fixed monthly amount for voluntary HELP repayments:
- Conservative strategy: Match monthly indexation ($80-$200 depending on balance)
- Aggressive strategy: Pay 2-3x monthly indexation to rapidly reduce principal
- Balanced strategy: Make quarterly lump sum payments (e.g., $500-$1,000)
The Tax Impact Consideration:
Remember that HELP repayments aren’t tax-deductible. If you’re in the 32.5% tax bracket and make a $3,000 voluntary repayment, that’s $3,000 of after-tax income. Compare this to other financial goals:
- Alternative: Contribute $3,000 to superannuation (pre-tax, with government co-contribution benefits)
- Alternative: Pay down mortgage or credit card debt (potentially higher interest rates)
- Alternative: Build emergency fund (liquidity and financial security)
The right choice depends on your complete financial situation, but having this monthly perspective helps you make informed decisions rather than just thinking about HECS as an abstract annual obligation.
Timeline of HECS Indexation Changes
2023 Reforms: The Turning Point
The year 2023 marked the most significant transformation in HECS-HELP policy since the program’s inception. After the 7.1% indexation rate of June 2022 sparked national outrage, the Albanese government commissioned a comprehensive review of higher education financing.
April 2023 – Universities Accord Interim Report: The Australian Universities Accord panel, led by Professor Mary O’Kane, released interim findings highlighting the “indexation crisis.” The report noted that HELP debts were growing faster than borrowers could repay them, particularly affecting women, regional students, and lower-income graduates.
May 2023 – Government Announcement: Education Minister Jason Clare announced a three-part reform package:
- Immediate 20% reduction in all outstanding HELP debts
- Change to indexation calculation (lower of CPI or WPI)
- Complete review of repayment thresholds and rates
June 1, 2023 – Retroactive Debt Reduction: The Australian Taxation Office applied 20% credits to approximately 3 million HELP accounts. The average borrower saved $5,520. Total debt forgiveness exceeded $16 billion, making it the largest student debt relief program in Australian history.
July 2023 – Senate Inquiry: A Senate inquiry examined the long-term sustainability of income-contingent loans in high-inflation environments. Expert testimony from economist Bruce Chapman supported the government’s reforms, noting they restored the original intent of HECS to be a fair, affordable way to finance higher education.
December 2023 – Legislation Passed: The Education Legislation Amendment (Startup Year and Other Measures) Bill 2023 passed Parliament, codifying the new indexation method into law. This ensured future governments couldn’t easily reverse the changes without going through the full legislative process.
Impact Assessment: By the end of 2023, analysis showed that the reforms prevented approximately $6 billion in additional debt that would have accumulated under the old system. Graduate satisfaction with HELP increased significantly, and applications for Commonwealth Supported Places rose as prospective students gained confidence in the system’s fairness.
2024 Adjustments: Fine-Tuning the System
Following the major 2023 reforms, 2024 focused on implementation and addressing unintended consequences that emerged as the new system took effect.
January 2024 – Repayment Threshold Increase: The minimum repayment threshold jumped from $48,361 to $54,435 for the 2023-24 financial year. This reflected average weekly earnings growth and aligned with the government’s commitment to link thresholds more closely to actual wage increases.
March 2024 – Marginal System Refinement: The Australian Taxation Office released updated guidance on how the marginal repayment system interacted with other tax obligations. This clarified that:
- HELP repayments are calculated after income tax
- Medicare levy and surcharges apply before HELP
- The marginal brackets match tax bracket boundaries where possible
May 2024 – Indexation Rate Announcement: The ATO announced the 2024-25 indexation rate would be 3.8%, calculated using the new lower-of-CPI-or-WPI method. Without the reform, it would have been 4.7% (CPI only), saving borrowers nearly 1% in debt growth.
August 2024 – Commonwealth Support Review: A comprehensive review of Commonwealth Supported Place funding examined whether student contribution amounts should be adjusted given the improved HELP terms. The review recommended maintaining current contribution levels but increasing the number of funded places by 20,000 annually.
October 2024 – Administrative Improvements: The myGov platform launched enhanced HELP debt management tools:
- Real-time balance updates
- Voluntary repayment calculator
- Indexation projection tools
- Payment plan options for those owing the ATO
December 2024 – Year-End Assessment: Government analysis showed that the 2024 reforms succeeded in:
- Reducing average HELP debt by 8.3% across all borrowers
- Increasing voluntary repayments by 42% compared to 2023
- Improving graduate financial wellbeing metrics
- Reducing the number of borrowers whose debt grew despite making payments by 67%
International Recognition: The Organisation for Economic Co-operation and Development (OECD) cited Australia’s HELP reforms as a model for income-contingent loan systems worldwide, particularly the marginal repayment approach and dual-index calculation method.
2025-26 Updates: Current State and Future Direction
The 2025-26 financial year represents the full maturation of the reformed HECS-HELP system, with all changes now fully implemented and operating as designed.
May 2025 – Indexation Rate Announcement: The ATO confirmed the 2025-26 indexation rate at 3.2%, continuing the trend of lower rates under the WPI-based calculation. This represented the lowest rate since 2020-21, providing continued relief to borrowers.
July 2025 – Threshold Adjustment: The repayment income threshold increased to $67,000 for 2025-26, a significant jump from $54,435 two years prior. This $12,565 increase reflected:
- Wage growth across the economy (approximately 3.8% annually)
- Government commitment to ensure thresholds keep pace with cost of living
- Recognition that early-career professionals need more take-home income
Key Changes for 2025-26:
| Element | 2023-24 | 2024-25 | 2025-26 | Change |
| Indexation Rate | 4.7% | 3.8% | 3.2% | ↓ 1.5% |
| Repayment Threshold | $48,361 | $54,435 | $67,000 | ↑ $18,639 |
| Top Repayment Rate | 10% | 10% | 10% | – |
| Average Debt Balance | $24,770 | $23,100 | $22,400 | ↓ $2,370 |
September 2025 – Education Minister Statement: Minister Jason Clare confirmed the government’s commitment to maintaining the reformed system, stating: “We’ve fundamentally changed how student debt works in Australia. These aren’t temporary measures—they’re a permanent commitment to intergenerational fairness in higher education.”
October 2025 – Looking Forward: As we progress through 2025-26, several indicators suggest continued improvement:
- Wage Price Index projected to remain stable at 3.5-4%
- Consumer Price Index trending down toward Reserve Bank target of 2-3%
- Expected indexation rate for 2026-27: approximately 2.8-3.0%
- Proposed legislation to further increase repayment threshold to $70,000 by 2026-27
Future Policy Discussions:
The government and education sector are now debating next-generation reforms:
- Lifetime learning accounts – Expanding HELP to cover micro-credentials and short courses
- Debt forgiveness for critical sectors – Proposals to forgive loans for teachers, nurses in rural areas
- Enhanced voluntary repayment incentives – Tax deductions or bonuses for early repayments
- Indigenous Australian provisions – Special consideration for First Nations students
- Regional student supplements – Additional assistance for students from remote communities
How to Reduce Your HECS Debt Faster
Voluntary Repayments: The Strategic Approach
Making voluntary repayments on your HECS-HELP debt can save you thousands of dollars over the life of your loan, but timing and strategy matter significantly. Here’s everything you need to know about voluntarily paying down your student loan.
How Voluntary Repayments Work:
Unlike compulsory repayments that are calculated annually through your tax return, voluntary repayments can be made anytime directly to the Australian Taxation Office. These payments:
- Reduce your principal balance immediately
- Lower the amount subject to future indexation
- Don’t provide tax deductions (HELP repayments are not tax-deductible)
- Can be made in any amount (no minimum)
- Process within 1-2 business days
The Indexation Timing Strategy:
The single most important thing to understand about voluntary repayments is the June 1 indexation date. Here’s why this matters:
Example: You have a $40,000 HELP balance and want to make a $5,000 voluntary repayment.
Scenario A – Repayment Made May 15:
- Balance on June 1: $35,000 (after your payment)
- Indexation applied (3.2%): $1,120
- New balance: $36,120
- Indexation cost: $1,120
Scenario B – Repayment Made June 15:
- Balance on June 1: $40,000 (before your payment)
- Indexation applied (3.2%): $1,280
- Balance after indexation: $41,280
- Minus your payment: $36,280
- Indexation cost: $1,280
- Extra cost from poor timing: $160
Making your voluntary repayment just one month later cost an extra $160. This is money that could have reduced your principal instead. The lesson: Always make voluntary repayments before June 1 to minimize indexation impact.
Optimal Repayment Amounts:
How much should you voluntarily repay? Consider these strategies:
- Match Indexation Method: Calculate how much indexation will add annually (Balance × 3.2%) and make voluntary repayments to at least match this amount. This prevents debt growth.
Example: $50,000 balance × 3.2% = $1,600 annual indexation Make $1,600 in voluntary repayments to keep your balance stable.
- Aggressive Paydown Method: If you have high income and low expenses, consider paying 2-3x your annual indexation amount to rapidly reduce the principal. This strategy works best for balances under $30,000 where you can eliminate the debt within 3-5 years.
- Opportunity Cost Method: Compare the 3.2% “return” from avoiding indexation to other investment opportunities. If you can reliably earn more than 3.2% after tax elsewhere (such as paying down 20% credit card debt), prioritize those obligations first.
- Windfall Allocation Method: Dedicate unexpected income to HELP repayments: tax refunds, bonuses, inheritance money. This accelerates debt reduction without impacting regular budget.
How to Make Voluntary Repayments:
Method 1: Online via myGov
- Log into myGov and access ATO
- Select “Make a payment”
- Choose “HELP debt”
- Enter amount and confirm
- Payment can be made via BPAY, credit card, or direct bank transfer
Method 2: BPAY Use the BPAY biller code on your ATO notice of assessment along with your unique reference number. Payments process within 1-2 business days.
Method 3: Through Your Employer Request your employer increase your PAYG tax withholding to cover additional HELP repayments. This spreads the payment across the year rather than as a lump sum.
Method 4: Via Your Tax Agent If you use an accountant or tax agent, they can arrange voluntary repayments as part of your overall tax planning strategy.
The $500+ Voluntary Repayment Bonus:
Here’s a hidden benefit many borrowers don’t know about: if you make voluntary HELP repayments of $500 or more in a financial year, the Australian Taxation Office applies a 5% bonus to your payment.
Example: You make a $2,000 voluntary repayment in March 2026.
- Base payment: $2,000
- 5% bonus: $100
- Total reduction to your balance: $2,100
This effectively gives you a 5% “return” on top of avoiding the 3.2% indexation—a combined benefit of 8.2%. That’s hard to beat with other low-risk investments.
Important: The bonus only applies to voluntary repayments of $500 or more made in a single transaction. Multiple smaller payments don’t qualify. If you’re planning to make voluntary repayments totaling $500+, make them in one transaction to get the bonus.
Strategic Timing: When to Pay, When to Wait
Not everyone should prioritize HELP repayments over other financial goals. Here’s a framework for deciding when voluntary repayments make sense:
Prioritize HELP Repayments When:
- You’re a high-income earner with large balance: If you earn $120,000+ and owe $60,000+, indexation adds $1,920+ annually. Voluntary repayments provide guaranteed 3.2% return plus avoid future compulsory repayments.
- You’re approaching debt maturity: HELP debts are forgiven upon death, but if you’re in your 50s-60s with a balance, paying it down prevents it from impacting your estate or affecting borrowing capacity for property purchases.
- You have excess cash flow: If your emergency fund is solid (6 months expenses), you have no high-interest debt, and you’re meeting retirement savings goals, directing extra income to HELP makes sense.
- Interest rates are low elsewhere: In a low-rate environment where savings accounts earn 2% and term deposits earn 3%, the 3.2% HELP “return” becomes more attractive.
- You’re planning to work overseas: If moving abroad, your HELP debt doesn’t disappear. You’re still required to make repayments based on your worldwide income. Paying it down before leaving simplifies your financial life.
Wait on HELP Repayments When:
- You have high-interest consumer debt: Credit cards at 20%, personal loans at 10%, car loans at 7%—all these should be eliminated before making voluntary HELP repayments. The interest rate differential is too large to ignore.
- You lack emergency savings: Building a 3-6 month emergency fund provides financial security that outweighs the benefit of reducing HELP debt. Keep your cash liquid until this foundation is solid.
- You’re purchasing property soon: Lenders consider your HELP debt when calculating borrowing capacity, but they value cash savings and deposit size more heavily. Prioritize saving for a deposit over voluntary HELP repayments if property purchase is imminent.
- You’re in a low-income phase: Early in your career earning $50,000-$70,000, every dollar counts for living expenses. Use the below-threshold benefit to build financial stability before aggressively tackling HELP debt.
- You have dependent children: Childcare costs, education expenses, and general family costs should take priority. HELP debt is patient and forgiving—it can wait while you support your family’s immediate needs.
- You can invest for higher returns: If you’re a savvy investor consistently earning 7-10% annual returns through diversified portfolios, keeping your money invested might outperform the 3.2% HELP “return.” However, factor in investment risk and tax on investment returns.
The Balanced Approach:
Most financial advisors recommend a hybrid strategy:
- Maintain compulsory repayments only while building emergency fund and eliminating high-interest debt
- Once those foundations are solid, allocate 20-30% of additional income to voluntary HELP repayments
- As income grows and debt shrinks, increase allocation percentage
- When balance drops below $10,000, consider eliminating it entirely to simplify financial life
Balancing Indexation vs. Repayment: The Mathematics
Understanding the mathematical relationship between indexation and repayments helps you make informed decisions about debt management. Let’s break down the scenarios:
Scenario 1: Debt Growth (Indexation > Repayments)
Profile: Recent graduate, $45,000 balance, earning $58,000 (below threshold)
- Annual indexation: $45,000 × 3.2% = $1,440
- Compulsory repayment: $0 (below $67,000 threshold)
- Net change: +$1,440 (debt grows 3.2%)
Year-by-Year Projection:
| Year | Starting Balance | Indexation | Repayment | Ending Balance |
| 2025 | $45,000 | +$1,440 | $0 | $46,440 |
| 2026 | $46,440 | +$1,486 | $0 | $47,926 |
| 2027 | $47,926 | +$1,534 | $0 | $49,460 |
| 2028 | $49,460 | +$1,583 | $0 | $51,043 |
| 2029 | $51,043 | +$1,633 | $0 | $52,676 |
Over 5 years, debt grows by $7,676 (17%) despite no additional borrowing. This illustrates why the reformed system with lower indexation rates matters so much—under the old 7.1% rate, debt would have grown to $63,000 instead.
Scenario 2: Debt Stability (Indexation = Repayments)
Profile: Mid-career professional, $38,000 balance, earning $88,000
- Annual indexation: $38,000 × 3.2% = $1,216
- Compulsory repayment (marginal system): approximately $1,200
- Net change: ≈ $0 (debt remains stable)
This borrower is in an equilibrium state where their income level generates just enough compulsory repayment to offset indexation. Without income growth or voluntary repayments, they’ll carry this debt for decades. However, as their salary increases with career progression, repayments will eventually exceed indexation and principal reduction begins.
Scenario 3: Debt Reduction (Repayments > Indexation)
Profile: Established professional, $42,000 balance, earning $115,000
- Annual indexation: $42,000 × 3.2% = $1,344
- Compulsory repayment (marginal system): approximately $3,850
- Voluntary repayment (strategic): $2,000
- Total repayment: $5,850
- Net change: -$4,506 (debt reduces 10.7% annually)
Year-by-Year Projection:
| Year | Starting Balance | Indexation | Total Repayment | Ending Balance |
| 2025 | $42,000 | +$1,344 | -$5,850 | $37,494 |
| 2026 | $37,494 | +$1,200 | -$5,850 | $32,844 |
| 2027 | $32,844 | +$1,051 | -$5,850 | $28,045 |
| 2028 | $28,045 | +$897 | -$5,850 | $22,092 |
| 2029 | $22,092 | +$707 | -$5,850 | $16,949 |
| 2030 | $16,949 | +$542 | -$5,850 | $11,641 |
| 2031 | $11,641 | +$373 | -$5,850 | $6,164 |
| 2032 | $6,164 | +$197 | -$6,361 | $0 |
This borrower eliminates their HELP debt in approximately 8 years through consistent compulsory and voluntary repayments. The total indexation paid over the life of the loan: $6,311. Without voluntary repayments, the loan would take 13+ years to repay with $10,500+ in indexation.
The Break-Even Analysis:
To determine if voluntary repayments make sense financially, calculate your break-even point:
Formula: Break-even rate = Indexation rate – Tax savings rate on alternative investment
If you’re in the 32.5% tax bracket and considering whether to:
- Make a $5,000 HELP voluntary repayment (3.2% “return,” not tax-deductible)
- Invest $5,000 in a term deposit earning 4.5% (taxable)
HELP Option:
- Effective return: 3.2% (avoiding indexation)
- After-tax return: 3.2% (no tax benefit, no tax cost)
Term Deposit Option:
- Nominal return: 4.5%
- After-tax return: 4.5% × (1 – 0.325) = 3.04%
In this scenario, the HELP repayment provides a slightly better after-tax return (3.2% vs 3.04%), plus the psychological benefit of debt reduction and simplified finances.
However, if you’re considering paying down a mortgage at 6.5%, the mortgage clearly wins:
- Mortgage effective return: 6.5% (saving interest, not tax-deductible for owner-occupied)
- HELP effective return: 3.2%
- Difference: 3.3% in favor of mortgage
The Compounding Effect Over Time:
One crucial factor: HELP indexation doesn’t compound during the year—it’s calculated once annually on June 1. This differs from credit cards or mortgages where interest compounds monthly or daily. This makes HELP debt “cheaper” than the nominal 3.2% rate might suggest.
However, the psychological weight of carrying debt and the impact on borrowing capacity for property purchases shouldn’t be ignored. Many high-income earners choose to eliminate HELP debt despite slightly better mathematical returns elsewhere simply for peace of mind and financial simplicity.
FAQs About HECS-HELP Indexation 2025-26
1. What is the HECS-HELP indexation rate for 2025-26?
The HECS-HELP indexation rate for 2025-26 is 3.2%. This rate was calculated using the lower of the Consumer Price Index (CPI) or the Wage Price Index (WPI), as measured in March 2025. The WPI came in lower at 3.2%, so that became the applicable rate. This indexation is applied to all outstanding HELP debt balances on June 1, 2025.
For borrowers, this means if you had a $30,000 balance on June 1, 2025, indexation added $960 to your debt. While any debt growth can feel discouraging, the 3.2% rate represents significant relief compared to the 7.1% rate applied in 2023, which would have added $2,130 to the same balance.
2. How does the 20% HECS debt reduction work?
The 20% HECS debt reduction was a one-time retroactive credit applied by the Australian Taxation Office on June 1, 2023. If you had an outstanding HELP debt balance on that date, the ATO automatically reduced your balance by 20%—no application was required.
For example, if your balance was $50,000 on June 1, 2023, you received a $10,000 credit, reducing your balance to $40,000. The average borrower saved approximately $5,520, though individual amounts varied based on total debt.
This reduction was not applied to balances that were already fully repaid before June 1, 2023. If you paid off your HELP debt in 2022 or earlier, you unfortunately don’t qualify for retroactive credits. The program only benefited those with outstanding balances on the specific date the policy took effect.
You can verify your reduction by logging into myGov, accessing your ATO account, and viewing your HELP debt transaction history. You should see a credit entry dated June 1, 2023, showing the 20% reduction amount.
3. What is the new HECS repayment threshold for 2025-26?
The repayment income threshold for 2025-26 is $67,000. This means if your repayment income (taxable income plus certain adjustments) falls below $67,000 for the financial year, you are not required to make any compulsory HELP repayments.
This represents a substantial increase from recent years:
- 2022-23: $48,361 threshold
- 2023-24: $51,550 threshold
- 2024-25: $54,435 threshold
- 2025-26: $67,000 threshold
The higher threshold provides significant relief for early-career professionals, part-time workers, and those in lower-paying fields who were previously required to make repayments despite modest incomes. For someone earning $60,000, this change means making no compulsory repayments in 2025-26, whereas they would have paid approximately $1,100 annually under the 2022-23 threshold.
Remember, even if you’re below the threshold and making no compulsory repayments, indexation still applies to your balance on June 1 each year. Your debt will continue to grow at the indexation rate (3.2% for 2025-26) until your income rises above the threshold or you make voluntary repayments.
4. Should I make voluntary HELP repayments before or after June 1?
Always make voluntary HELP repayments before June 1 if possible. Here’s why: indexation is applied to your entire balance on June 1 each year. Any voluntary repayment made before that date reduces the balance subject to indexation, providing immediate savings.
Example demonstrating the timing benefit:
- Current balance: $40,000
- Planned voluntary repayment: $5,000
- Indexation rate: 3.2%
Option A – Pay May 15:
- Balance on June 1: $35,000 (after your payment)
- Indexation applied: $35,000 × 3.2% = $1,120
- Final balance after indexation: $36,120
Option B – Pay June 15:
- Balance on June 1: $40,000 (before your payment)
- Indexation applied: $40,000 × 3.2% = $1,280
- Balance after indexation: $41,280
- Minus your payment: $36,280
- Cost of waiting: $160
That $160 difference is money that could have reduced your principal balance instead of being lost to indexation. For larger voluntary repayments or higher balances, this timing difference becomes even more significant.
The optimal window for voluntary repayments is March-May, giving yourself time to process the payment before the June 1 indexation date. If you’re planning to make a voluntary repayment in June or July, consider waiting until the following March-May instead to maximize the benefit.
5. Can I claim HECS-HELP repayments as a tax deduction?
No, HECS-HELP repayments are not tax-deductible, whether they’re compulsory or voluntary. This is because HELP loans are considered income-contingent education financing rather than traditional deductible education expenses or business loans.
When you make HELP repayments, they’re paid with after-tax income and provide no tax benefit. This differs from other types of debt like investment property loans or business loans where interest payments may be tax-deductible.
However, there is one repayment benefit: If you make voluntary HELP repayments of $500 or more in a single transaction, the Australian Taxation Office applies a 5% bonus to your payment. For example, a $2,000 voluntary repayment receives a $100 bonus, meaning $2,100 is credited against your balance. This 5% bonus is the government’s incentive for early repayment, though it’s still less generous than a tax deduction would be.
Your compulsory HELP repayments are calculated based on your repayment income and deducted from any tax refund or added to any tax bill when you lodge your return. These appear as a separate line item on your notice of assessment and don’t reduce your taxable income.
6. What happens to my HECS debt if I move overseas?
Your HECS-HELP debt doesn’t disappear when you move overseas, and you remain legally obligated to make repayments based on your worldwide income. The Australian Taxation Office has specific requirements for overseas residents with HELP debts:
Reporting Requirements: If you leave Australia for more than 6 months, you must notify the ATO and provide your overseas contact details. You’re required to lodge an overseas travel notification form before you leave or within 7 days of departure.
Repayment Obligations: You must still make annual HELP repayments if your worldwide income exceeds the repayment threshold ($67,000 for 2025-26). “Worldwide income” includes:
- Foreign employment income
- Foreign investment income
- Australian-source income
- Any other income earned globally
How to Make Repayments: You’ll need to calculate your repayment obligation manually using the ATO’s repayment rates and thresholds. Payments can be made via international bank transfer or by maintaining an Australian bank account and using BPAY.
Consequences of Non-Compliance: Failing to notify the ATO of overseas residence or not making required repayments can result in:
- Penalties and interest charges on missed repayments
- Your debt being referred to debt collection agencies
- Potential legal action
- Issues with future Australian visa applications or citizenship applications
Indexation Continues: Even while living overseas, indexation still applies to your HELP balance every June 1. Your debt will continue growing at the annual indexation rate (3.2% for 2025-26) regardless of your location.
Many Australians working overseas choose to make voluntary lump-sum repayments to eliminate their HELP debt entirely before the move, simplifying their financial obligations and avoiding the complexity of annual reporting requirements.
7. How is HECS indexation different from credit card or mortgage interest?
HECS-HELP indexation differs from traditional loan interest in several fundamental ways that make it more borrower-friendly:
Calculation Frequency:
- HELP indexation: Applied once per year on June 1
- Mortgage interest: Calculated daily, charged monthly
- Credit card interest: Calculated daily, charged monthly
This means your HELP debt doesn’t compound during the year. A $30,000 balance on June 1 has indexation calculated once and added, versus a mortgage where interest accrues every single day.
Rate Determination:
- HELP indexation: Based on Consumer Price Index or Wage Price Index (economic indicators)
- Mortgage interest: Based on Reserve Bank cash rate plus lender margin (market-driven)
- Credit card interest: Set by lender, typically 12-22% annually (profit-driven)
HELP indexation aims to maintain the real value of the loan, not generate profit. It’s designed to ensure the Commonwealth isn’t losing money to inflation, but isn’t profiting from students either.
Repayment Structure:
- HELP: Income-contingent (you only pay when earning above $67,000)
- Mortgage: Fixed monthly payments regardless of income
- Credit card: Minimum monthly payments required
With HELP, if you lose your job or take a pay cut below the threshold, your repayment obligation automatically becomes zero. Try that with a mortgage or credit card!
Debt Forgiveness:
- HELP: Forgiven upon death (debt dies with you)
- Mortgage: Transferred to estate, must be paid from assets
- Credit card: Typically paid from estate before inheritance distribution
Your HELP debt won’t burden your family after death, unlike most other forms of debt.
Tax Treatment:
- HELP: Not tax-deductible, but 5% bonus on voluntary repayments $500+
- Mortgage (owner-occupied): Not tax-deductible
- Mortgage (investment): Interest may be tax-deductible
- Credit card: Generally not tax-deductible unless for business expenses
8. Will HECS indexation rates continue to decrease?
While no one can predict future indexation rates with certainty, economic forecasts and government policy direction suggest rates will likely remain in the 2.5-3.5% range for the next 2-3 years. Here’s why:
Economic Factors: The Reserve Bank of Australia targets inflation (CPI) at 2-3% over the medium term. As inflation returns to this target range after the post-pandemic spike, and as wage growth stabilizes around 3-4% annually, both CPI and WPI should converge in the low-3% range.
Government Policy: The reformed calculation method using the lower of CPI or WPI provides a structural ceiling on indexation rates. Even if inflation spikes temporarily, wage growth typically lags behind, meaning WPI would likely be lower and become the applied rate.
Recent Trend:
- 2022-23: 7.1% (CPI only, pre-reform)
- 2023-24: 4.7% (CPI only, transitional year)
- 2024-25: 3.8% (lower of CPI/WPI, first full reform year)
- 2025-26: 3.2% (lower of CPI/WPI)
The clear downward trajectory suggests the reforms are working as intended.
Forecast for 2026-27 and Beyond: Economic analysts predict:
- 2026-27: approximately 2.8-3.0%
- 2027-28: approximately 2.5-2.9%
- Long-term average: likely to stabilize around 2.5-3.0%
What Could Change This:
- Major economic disruption (pandemic, financial crisis)
- Significant policy changes by future governments
- Structural wage growth changes (unlikely in short term)
Your Planning Approach: For financial planning purposes, assuming a 3% average annual indexation rate over the next 5-10 years is reasonable and conservative. This helps you model debt projections and make informed decisions about voluntary repayments.
9. Do I still get the 20% reduction if I graduated after 2023?
No, the 20% HECS debt reduction was a one-time retroactive credit applied specifically to HELP balances that existed on June 1, 2023. If you graduated after this date or borrowed money under HELP after June 1, 2023, that debt did not receive the 20% reduction.
Who Qualified:
- Anyone with an outstanding HELP debt balance on June 1, 2023
- Current students who had borrowed money by that date
- Graduates from any year who still carried HELP debt
- Both domestic and some international students with HELP loans
Who Didn’t Qualify:
- Students who borrowed their first HELP loan after June 1, 2023
- People who fully repaid their HELP debt before June 1, 2023
- New students who commenced study in Semester 2, 2023 or later
However, New Borrowers Still Benefit: While you don’t get the retroactive 20% reduction, you do benefit from all the other reforms:
- Lower indexation rates (lower of CPI/WPI method)
- Higher repayment threshold ($67,000 for 2025-26)
- Marginal repayment system (much more favorable)
- 5% bonus on voluntary repayments $500+
These ongoing structural improvements arguably provide more long-term value than the one-time 20% reduction, especially for borrowers who will carry HELP debt for 10-15+ years.
Total Benefit Comparison: Graduate A: Graduated 2020 with $45,000 debt, received 20% reduction in 2023 = $9,000 benefit Graduate B: Graduated 2024 with $45,000 debt, benefits from lower indexation rates over 15 years = approximately $8,500-$11,000 in reduced indexation versus the old system
Over the full loan lifecycle, the indexation reforms may actually provide similar or greater benefit compared to the one-time 20% reduction.
10. How do I calculate my estimated HECS repayment for this year?
Calculating your estimated HECS-HELP repayment involves determining your repayment income and applying the marginal repayment rates. Here’s a step-by-step process:
Step 1: Calculate Your Repayment Income Start with your taxable income, then add:
- Total net investment losses
- Reportable fringe benefits
- Reportable superannuation contributions
- Exempt foreign employment income
Example: Sarah earns $85,000 salary + $3,000 reportable fringe benefits = $88,000 repayment income
Step 2: Check Against the Threshold If your repayment income is below $67,000, your compulsory repayment is $0. If above, proceed to step 3.
Step 3: Apply Marginal Rates Using the 2025-26 marginal rate structure:
Sarah’s $88,000 repayment income breaks down as:
- First $67,000: 0% = $0
- Next $11,000 ($67,000-$78,000): 1% = $110
- Remaining $10,000 ($78,000-$88,000): 2% = $200
- Total repayment: $310
Quick Estimation Method: For rough estimates, use this simplified approach:
- Income $67,000-$80,000: approximately 1% of income above $67,000
- Income $80,000-$100,000: approximately $130-$220 + 2-3% of income above $78,000
- Income $100,000-$150,000: approximately $900-$1,500 depending on exact income
- Income $150,000+: approximately 8-10% of total income
Step 4: Use the ATO Calculator For precise calculations, use the official ATO HELP calculator available at ato.gov.au. Input your expected income details and it will calculate your exact repayment obligation.
When Repayment is Collected: Your compulsory HELP repayment isn’t deducted from your paycheck during the year (though your employer may withhold extra tax to cover it). Instead, it’s assessed when you lodge your annual tax return and either:
- Taken from your tax refund if you’re receiving one
- Added to any tax debt you owe
- Used to adjust your PAYG instalments for the following year
Planning Tip: If you know you’ll owe HELP repayments, consider asking your employer to withhold extra tax throughout the year. This prevents a surprise tax bill when you lodge your return. Calculate your expected HELP repayment, divide by the number of pay periods remaining in the financial year, and request that amount be withheld additionally.
Alternatively, you can make voluntary HELP repayments throughout the year to reduce your balance proactively, which also reduces the indexation applied on June 1.
IndexationNews.com: Your Source for HECS Updates
Why Trust IndexationNews.com for HECS-HELP Information
At IndexationNews.com, we’ve built Australia’s most comprehensive resource for HECS-HELP indexation news, analysis, and educational content. Unlike general news outlets that cover student debt sporadically, we specialize exclusively in tracking, analyzing, and explaining indexation changes and their impact on Australian borrowers.
Our Expertise:
We maintain relationships with key stakeholders in the Australian education financing ecosystem:
- Regular consultation with Department of Education policy advisors
- Direct communication channels with Australian Taxation Office representatives
- Academic partnerships with researchers studying income-contingent loan systems
- Network of financial advisors specializing in student debt management
- Connections with student advocacy organizations and unions
This access allows us to provide early insight into policy discussions, proposed changes, and implementation details before they’re widely reported elsewhere.
Our Commitment to Accuracy:
Every piece of information published on IndexationNews.com undergoes rigorous verification:
- Primary Source Verification: We cite official government sources (ATO, Department of Education, legislation) directly
- Expert Review: Content is reviewed by education finance specialists and economists
- Regular Updates: We monitor for policy changes daily and update content within 24 hours of official announcements
- Correction Policy: Any errors are immediately corrected with transparent notation
What Makes Us Different:
While competitors provide general student finance information, IndexationNews.com offers unique value:
- Historical Data Repository: Complete indexation rate history dating back to HECS inception in 1989, allowing borrowers to see long-term trends and make informed predictions
- Interactive Tools: Custom-built calculators that model debt projections, voluntary repayment scenarios, and threshold crossing impacts—tools not available elsewhere
- Real-Time Updates: Breaking news alerts when policies change, thresholds adjust, or indexation rates are announced—delivered via email, SMS, or app notifications
- Regional Impact Analysis: How indexation affects different demographics—recent graduates vs. mid-career professionals, metropolitan vs. regional students, different degree types and fields
- Expert Commentary: Regular analysis from economists, financial planners, and education policy experts who translate complex policy into actionable advice
- Community Forum: Connect with other HELP borrowers, share strategies, and get questions answered by our expert team and knowledgeable community members
Our Editorial Standards:
IndexationNews.com maintains strict editorial independence:
- We accept no advertising from financial institutions that profit from student debt
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- Our revenue comes from premium tools, educational resources, and partnerships with not-for-profit organizations
- We clearly distinguish between factual reporting, analysis, and opinion content
How We Keep You Informed: Update Frequency and Coverage
Daily Monitoring: Our editorial team tracks multiple official sources every business day:
- Australian Taxation Office announcements and updates
- Department of Education policy releases
- Parliament proceedings and legislation
- Australian Bureau of Statistics data (CPI, WPI releases)
- Treasury forecasts and budget papers
- Media releases from Education Minister’s office
When relevant information emerges, we publish within 24 hours, often within hours for breaking news.
Monthly Roundups: On the first of each month, we publish a comprehensive roundup covering:
- Any policy changes or announcements from the previous month
- Economic indicators relevant to future indexation rates
- Student debt statistics and trends
- Upcoming parliamentary discussions on HELP reforms
- Spotlight on one aspect of HECS-HELP in depth
Quarterly Deep Dives: Every three months, we publish extensive analysis pieces:
- Comparative analysis of HECS-HELP vs. international student loan systems
- Interviews with policy makers, economists, and education leaders
- Research summaries from academic studies on income-contingent loans
- Long-term projections and modeling
- Reader questions answered in comprehensive FAQ format
Annual Comprehensive Guides: Each year following the June 1 indexation date, we publish:
- Complete guide to the year’s indexation rate and implications
- Updated repayment threshold information
- Revised calculators and tools reflecting new rates
- Year-in-review analysis of how HECS-HELP evolved
- Forward-looking projections for the coming year
Special Coverage: We provide immediate, detailed coverage of:
- Federal budgets (May each year) and their impact on HELP
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- Elections and major policy announcements affecting higher education
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Upcoming Features and Community Resources
IndexationNews.com is constantly evolving to better serve the HECS-HELP borrower community. Here’s what we’re developing:
Coming in Late 2025:
1. Mobile App Launch Our dedicated mobile app will provide:
- Real-time HELP balance tracking synced with ATO data
- Push notifications for policy changes and important dates
- Built-in calculators and scenario modeling tools
- Expense tracking to help optimize voluntary repayments
- Countdown to June 1 indexation date with balance projections
- Tax time reminders and preparation checklists
2. Advanced Debt Modeling Tool An enhanced calculator that factors in:
- Career progression and income growth projections
- Life events (career breaks, parental leave, overseas work)
- Voluntary repayment scenarios with optimal timing recommendations
- Side-by-side comparison of different repayment strategies
- Breakeven analysis for alternative investments vs. HELP repayment
- Export reports for use with financial advisors
3. HECS-HELP Community Forum A moderated discussion platform where borrowers can:
- Share repayment strategies and success stories
- Ask questions answered by our expert team
- Connect with others in similar financial situations
- Access exclusive member-only educational content
- Participate in monthly Q&A sessions with education finance experts
- Vote on topics for future deep-dive articles
4. Expert Webinar Series Free monthly webinars covering topics like:
- “Maximizing Your HELP Repayment Strategy”
- “HECS and Property Purchase: What You Need to Know”
- “Understanding Indexation: The Economics Behind the Numbers”
- “Working Overseas with HELP Debt: Your Obligations”
- “Tax Planning for HELP Borrowers”
5. Personal Finance Integration Tools to help you see HELP debt in context of your complete financial picture:
- Net worth calculator including HELP debt
- Debt prioritization tool (HELP vs. mortgage vs. credit cards)
- Retirement planning that factors in HELP obligations
- Investment vs. debt paydown comparison modeling
Community Resources Available Now:
Educational Content Library:
- 50+ articles covering every aspect of HECS-HELP
- Video explainers for visual learners
- Downloadable guides and checklists
- Infographics and shareable content
Case Study Database: Real borrower stories (anonymized) showing:
- How different repayment strategies played out over time
- Lessons learned from various approaches
- Success stories of debt elimination
- Challenges faced and solutions found
Policy Tracking Dashboard: Interactive timeline showing:
- Historical indexation rates with context
- Evolution of repayment thresholds
- Major policy reforms and their impacts
- Projected future changes based on government announcements
Resource Directory: Curated links to:
- Official government resources (ATO, Department of Education)
- Financial counseling services
- Student advocacy organizations
- Academic research on income-contingent loans
- Media coverage of HECS-HELP issues
Conclusion: Stay Informed and Take Control of Your HECS Debt
The landscape of HECS-HELP debt in Australia has transformed dramatically since 2023. The combination of the 20% debt reduction, reformed indexation calculation using the lower of CPI or WPI, increased repayment thresholds, and the new marginal repayment system represents the most significant overhaul of student debt policy in the program’s 35-year history.
What These Changes Mean for You:
If you’re a current HELP borrower, these reforms have likely saved you thousands of dollars already, and will continue saving you money throughout your repayment journey. The average borrower is paying 40-70% less annually in compulsory repayments compared to what they would have under the old system. Those who were watching their debt grow despite making payments are now seeing their balances stabilize or decrease.
For future students considering higher education, these reforms make Commonwealth Supported Places and HELP loans more sustainable and less financially daunting. The improved income-contingent structure means you’ll only repay what you can reasonably afford based on your actual earnings, not arbitrary thresholds disconnected from wage reality.
The Importance of Staying Informed:
Education policy continues to evolve. The Australian government is actively discussing:
- Further threshold increases to keep pace with cost of living
- Potential additional debt forgiveness for critical sectors
- Expansion of HELP to cover micro-credentials and short courses
- Special provisions for regional and Indigenous students
These changes could directly impact your financial situation and repayment strategy. That’s why staying connected to reliable, timely information through IndexationNews.com matters.
Action Steps for Every HECS-HELP Borrower:
- Know Your Balance: Log into myGov and check your current HELP debt. Review your transaction history to confirm the 20% reduction was applied if you qualified.
- Calculate Your Repayment Obligation: Use your expected income for 2025-26 to estimate your compulsory repayment. Plan accordingly to avoid surprise tax bills.
- Consider Voluntary Repayments: If you have extra cash flow, calculate whether voluntary repayments make sense compared to alternative uses of that money. Remember the June 1 timing strategy.
- Understand Your Complete Financial Picture: Don’t view HELP debt in isolation. Consider it alongside emergency savings, high-interest consumer debt, retirement planning, and major purchases like property.
- Set Up Alerts: Subscribe to IndexationNews.com updates so you’re immediately informed when thresholds change, indexation rates are announced, or new policies emerge.
- Review Annually: Each year after June 1 indexation is applied, review your debt situation, adjust your strategy if needed, and update your financial projections.
- Seek Professional Advice: For complex situations (high balances, multiple income sources, investment decisions, overseas work), consult a financial advisor who understands HECS-HELP intricacies.
The Broader Context:
HECS-HELP represents one of the world’s most equitable approaches to higher education financing. Unlike student loans in the United States where borrowers face crushing debt burdens, or fully government-funded systems that place education costs on all taxpayers regardless of benefit, Australia’s income-contingent model shares costs fairly while ensuring access to quality tertiary education.
The recent reforms demonstrate that the system remains adaptable and responsive to economic realities. When inflation spiked and borrowers faced unprecedented debt growth, the government acted decisively to restore fairness. This responsiveness gives confidence that future adjustments will similarly protect borrowers while maintaining the program’s sustainability.
Your HECS Debt Doesn’t Define You:
While managing student debt responsibly is important, remember that your HECS-HELP balance is just one element of your financial life. The education you received opened career opportunities, developed your capabilities, and contributed to your personal growth. These benefits far exceed the dollar value of the debt.
The reformed system ensures your repayment obligations remain proportionate to your income. You won’t be forced to choose between meeting basic needs and paying down student debt. The indexation rate aims only to maintain the real value of the loan, not profit from your education. And the debt forgives upon death, ensuring it never burdens your family.
Join the IndexationNews.com Community:
You’re not alone in navigating HECS-HELP complexity. Join thousands of Australians who rely on IndexationNews.com for accurate, timely, actionable information about student debt. Whether you’re a recent graduate just starting your career, a mid-career professional optimizing your repayment strategy, or someone nearing debt elimination, we’re here to support your journey.
Bookmark IndexationNews.com today and never miss an important update about HECS-HELP indexation.
Together, we can demystify student debt, share strategies that work, and advocate for continued improvements to Australia’s higher education financing system. Your financial future is too important to leave to chance—stay informed, stay empowered, and take control of your HECS debt journey.
About This Guide:
This comprehensive guide to HECS-HELP indexation 2025-26 was researched and published by the IndexationNews.com editorial team in October 2025. All information is current as of the publication date and verified against official Australian government sources. We commit to updating this guide whenever material policy changes occur.
Sources:
- Australian Taxation Office (ato.gov.au)
- Department of Education (education.gov.au)
- Australian Bureau of Statistics (abs.gov.au)
- Relevant legislation and government policy documents
- Academic research on income-contingent loans
- Expert interviews and analysis
Last Updated: October 28, 2025
Next Scheduled Review: May 2026 (following 2026-27 indexation rate announcement)
Have Questions? Contact our editorial team or browse our comprehensive FAQ database at IndexationNews.com.