HELP/HECS Debt Repayment: Everything You Need to Know for 2025-2026

For millions of Australians, pursuing higher education means taking on a HELP or HECS debt. While this government-supported loan system makes university accessible, understanding how repayments work is essential for managing your finances after graduation. This comprehensive guide explains the current repayment thresholds, rates, and strategies for handling your student debt in the 2025-2026 financial year.

Understanding HELP and HECS Terminology

Before diving into repayment details, it is helpful to understand the terminology. HECS stands for Higher Education Contribution Scheme, which was the original name for government student loans introduced in 1989. In 2005, the system was renamed to HELP, which stands for Higher Education Loan Program.

Today, HELP encompasses several types of loans. HECS-HELP is available for Commonwealth-supported students at universities. FEE-HELP covers tuition fees for full-fee paying students. VET Student Loans are for vocational education students. SA-HELP covers student services and amenities fees. OS-HELP provides loans for overseas study. All these loan types follow the same repayment rules.

Many people still use HECS and HELP interchangeably when referring to their student debt. Regardless of what you call it, the debt is managed by the Australian Taxation Office and repayments are collected through the tax system.

When Do Repayments Begin?

One of the key features of the HELP system is that you do not need to start making repayments until your income exceeds a certain threshold. This income-contingent approach means that if you earn below the threshold, you pay nothing, making the loan system accessible regardless of your immediate employment outcomes after graduation.

For the 2025-26 financial year, the minimum repayment threshold is $54,435. This means if your repayment income is below this amount, you will not make any compulsory repayments on your HELP debt that year. Your debt will remain on your account (indexed for inflation) until your income exceeds the threshold.

Repayment income is calculated as your taxable income plus any reportable fringe benefits, reportable super contributions, and net investment losses. This ensures that people with significant non-wage income also contribute to repaying their debt.

HELP Repayment Rates for 2025-2026

Once your income exceeds the minimum threshold, your repayment rate is determined by which income band you fall into. The rates are progressive, meaning higher earners pay a higher percentage. Here are the current repayment rates:

For incomes between $54,435 and $62,850, the repayment rate is 1%. Between $62,851 and $66,620, the rate increases to 2%. From $66,621 to $70,618, you pay 2.5%. For $70,619 to $74,855, the rate is 3%. Between $74,856 and $79,346, you pay 3.5%.

The rates continue to increase: 4% for $79,347 to $84,107, 4.5% for $84,108 to $89,154, 5% for $89,155 to $94,503, 5.5% for $94,504 to $100,174, and 6% for $100,175 to $106,185. At higher incomes, rates reach 6.5% for $106,186 to $112,556, 7% for $112,557 to $119,309, 7.5% for $119,310 to $126,467, 8% for $126,468 to $134,056, 8.5% for $134,057 to $142,100, 9% for $142,101 to $150,626, 9.5% for $150,627 to $159,663, and the maximum rate of 10% for incomes of $159,664 and above.

How HELP Repayments Are Calculated

It is important to understand that the repayment rate applies to your entire repayment income, not just the portion above the threshold. This can create a significant jump in repayments as you cross from one band to another.

For example, if you earn $62,850, your repayment is 1% of your total income, which equals $629 for the year. However, if you earn just $1 more ($62,851), you move into the 2% bracket, and your repayment jumps to $1,257. This $628 increase in repayment from earning one extra dollar is something to be aware of when you are close to threshold boundaries.

Your employer withholds HELP repayments from your pay throughout the year based on your estimated annual income. At tax time, the ATO calculates your exact obligation based on your actual income for the year and adjusts any over or under payments.

How HELP Debt Is Indexed

Unlike commercial loans, HELP debts do not accrue interest. However, they are indexed annually to maintain their real value against inflation. The indexation rate is based on the Consumer Price Index and is applied on 1 June each year to any debt that was incurred more than 11 months prior.

In recent years, high inflation has led to significant indexation increases, which has concerned many HELP debtors. While indexation can make your debt grow faster in nominal terms, it is still generally more favourable than commercial interest rates. The government has also introduced caps on indexation to prevent excessive growth during periods of high inflation.

Voluntary Repayments

While compulsory repayments are only required when your income exceeds the threshold, you can make voluntary repayments at any time. These payments directly reduce your HELP debt balance.

Previously, the government offered a bonus for voluntary repayments, but this was discontinued in 2017. There is now no financial incentive to pay off your HELP debt early beyond the psychological benefit of being debt-free and the elimination of future indexation on the repaid amount.

Whether to make voluntary repayments is a personal decision that depends on your financial circumstances. Given that HELP has no real interest and repayments are income-contingent, many financial advisors suggest prioritizing other financial goals like building an emergency fund, paying off higher-interest debts, or investing for the future.

Strategies for Managing HELP Debt

Understanding the repayment system helps you plan your finances effectively. If you are close to a threshold boundary and expect a bonus or pay rise, consider whether the increased repayment percentage is significant for your situation.

Salary sacrificing into superannuation can reduce your taxable income and potentially move you into a lower repayment bracket. However, the tax implications should be considered carefully, and this strategy is more beneficial for higher-income earners.

If you are working overseas, be aware that the ATO still tracks your worldwide income for HELP purposes. You need to report your income and may still be required to make repayments based on that income.

Impact on Take-Home Pay

HELP repayments can significantly impact your take-home pay, especially as you move into higher income brackets. For someone earning $80,000 with a HELP debt, the 4% repayment means $3,200 less in annual take-home pay compared to someone without a HELP debt.

When budgeting, it is important to account for HELP repayments alongside your income tax and Medicare levy. Our Australian tax calculator includes HELP repayment calculations so you can see your true take-home pay.

Conclusion

The HELP system provides accessible higher education financing for Australians, with income-contingent repayments that adapt to your financial circumstances. Understanding when repayments begin, how rates are calculated, and the impact on your budget helps you plan effectively for life after graduation.

While carrying a HELP debt might feel burdensome, the system is designed to be manageable. Repayments only occur when you can afford them, and the debt does not prevent you from accessing other financial products like home loans. To see exactly how HELP repayments affect your take-home pay, use our free Australian tax calculator with HELP debt calculations included.