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HECS-HELP repayment thresholds 2026

HECS-HELP (now formally called HELP - Higher Education Loan Program) repayments kick in once your income exceeds the minimum repayment threshold. In 2026, both the thresholds and the indexation framework have evolved from the 2020-era rules, and graduates with HELP debt need to understand the current mechanics to plan cash flow.

The 2025-26 repayment thresholds and rates

  • $54,435 - $62,850: 1%
  • $62,851 - $66,620: 2%
  • $66,621 - $70,618: 2.5%
  • $70,619 - $74,855: 3%
  • $74,856 - $79,346: 3.5%
  • $79,347 - $84,107: 4%
  • $84,108 - $89,154: 4.5%
  • $89,155 - $94,503: 5%
  • $94,504 - $100,174: 5.5%
  • $100,175 - $106,185: 6%
  • $106,186 - $112,556: 6.5%
  • $112,557 - $119,309: 7%
  • $119,310 - $126,467: 7.5%
  • $126,468 - $134,056: 8%
  • $134,057 - $142,100: 8.5%
  • $142,101 - $150,626: 9%
  • $150,627 - $159,663: 9.5%
  • $159,664+: 10%

The rate is applied to your total taxable income (including reportable fringe benefits and reportable super), not just the portion above the threshold. A $160k earner pays 10% of $160k = $16,000 in HELP repayment that year.

The 2023-2024 reform

Before 2023, HELP debts were indexed to the full Consumer Price Index (CPI) each June. This caused significant hardship in 2023 when CPI reached 7.1%, making HELP debts grow faster than many borrowers’ incomes.

The 2024 reform:

  • HELP indexation now the lower of CPI or Wage Price Index (WPI)
  • Retrospective application: 2023 indexation recalculated to the lower WPI rate, with credit adjustments
  • This reduces real debt growth in high-inflation periods

2024 indexation: 4.0% 2025 indexation: 3.2% (estimated; WPI below CPI)

What this means for borrowers

For someone with $50k HELP debt:

  • Pre-reform 2023 indexation: 7.1% = $3,550 added
  • Post-reform 2023 indexation: 3.2% (WPI) = $1,600 added
  • Credit adjustment for 2023: $1,950 returned

The reform was genuinely helpful. Total HELP debts across the population are smaller than they would have been.

Compulsory repayment is automatic

For PAYG employees, compulsory HELP repayment is withheld from your pay (like PAYG tax). Your employer calculates the repayment based on expected annual income.

At tax return time, the actual repayment is calculated based on your final taxable income. Adjustments (refund or additional payment) flow through your tax assessment.

Voluntary repayments

You can voluntarily pay extra HELP off at any time. Voluntary repayments are not tax-deductible but do immediately reduce the indexed balance.

Strategy considerations for voluntary repayments:

Pre-reform era (when CPI indexation was high): Some argued paying off HELP was financially sensible.

Post-reform era (WPI-based indexation): HELP debt indexation is below typical investment returns. The debt is effectively “cheap money”. Voluntary repayments may not be financially optimal; paying minimums and investing elsewhere may produce better outcomes.

The home loan interaction

HELP debt is listed as a liability on loan applications. Lenders typically assess:

  • Required HELP repayment (a percentage of income)
  • Reduces serviceable income by that amount

On $100k income with no HELP: full income available On $100k with HELP debt: serviceable income reduced by 5.5% = $5,500

The impact on loan size: approximately $40k-$50k less borrowing capacity for every 1% of HELP repayment rate applied.

Strategic question: is it worth paying off HELP early to restore borrowing capacity?

Example: $30k HELP debt, $100k income (5.5% repayment = $5,500/year)

  • Paying $30k voluntary repayment → eliminates HELP → unlocks $40k-$50k additional borrowing capacity
  • But $30k used for HELP can’t be used for deposit
  • Net effect: $20k-$30k more deposit available if kept, or $40k-$50k more loan capacity if HELP paid

For first home buyers constrained by serviceability, paying HELP early often makes sense.

The “phantom income” problem for overseas Australians

Australian citizens working overseas have HELP repayment obligations based on their worldwide income. You must lodge an Australian tax return (or self-assessment) annually, calculate the repayment based on your foreign income, and pay. This is called “overseas compulsory repayment”.

Many expats don’t realise this. The ATO pursues unpaid overseas HELP repayments actively; interest and penalties accrue.

HELP debt and retirement

HELP debt continues until paid. It does not expire with age. Retirees with residual HELP debt:

  • Income below threshold: no compulsory repayment
  • Indexation still applies (at WPI or CPI, whichever is lower)
  • Debt remains until paid voluntarily or written off at death

In practice, HELP debts after retirement usually aren’t a problem because retirement income is often below the repayment threshold.

The planning summary

For working graduates:

  • Accept compulsory repayment as part of tax
  • Voluntary repayments generally not financially optimal (in post-reform era)
  • Consider voluntary repayment only if you’re constrained by borrowing capacity for a home purchase

For high-income graduates:

  • HELP repayment at 10% of income is a significant cash flow impact
  • Consider salary sacrificing to super to reduce assessable income, which reduces HELP repayment
  • Plan around the threshold brackets - crossing from 9.5% to 10% on a small increase in income costs $1k-$2k

For those considering postgraduate study:

  • New HELP debt adds to existing debt
  • Indexation makes the debt grow regardless of your repayments
  • The cost-benefit of postgraduate study includes the HELP debt cost over 15-20 years

For most graduates, HELP is simply a wage-based tax. The 2024 reforms have made the long-term economics more benign. The real decision for most people is whether additional HELP debt from further study is worth the career outcome - not whether to pay off existing HELP.