If you earn under $69,528 in 2026-27, you will repay nothing on your HECS debt. Above that threshold, you make repayments on a marginal basis: 15c on each dollar over $69,528, rising to 17c higher up, and a flat 10% of your whole income at the very top. On a $90,000 salary that is about $3,071 a year, roughly $59 a week. This is deducted automatically through your pay by your employer.
Two big things changed recently: From 1 July 2025 the system went marginal, so a small pay rise no longer triggers a jump in repayments across your entire income. And in June 2025 every HELP debt was cut by 20% in a one-off reduction.
What is HECS?
HECS-HELP is the government loan that covers your university fees. Most people still call it HECS, though HELP (Higher Education Loan Program) is the official name for the wider scheme now. It works differently from a normal loan: it charges no interest, only an annual indexation adjustment, and you never make manual repayments. Once you earn above a set threshold, repayments come out automatically through the tax system as a share of your income.
How HECS repayments work now
Your HECS repayment is worked out from your repayment income: your taxable income plus a few things are included, these are reportable fringe benefits, net investment losses, and reportable super contributions. That last one matters, because it is why salary sacrificing into super does not lower your HECS repayment, even though it lowers your income tax. See how salary sacrifice works for more information.
Your repayment is not based on how much you still owe. Two people earning the same salary repay the same amount whether their debt is $5,000 or $50,000, because the repayment is a share of income, not a share of the balance.
The clearest way to see the add-back: on a $100,000 salary where you sacrifice $10,000 into super, your income tax is worked out on $90,000, but your HECS repayment is worked out on the full $100,000.
| Calculated on | |
|---|---|
| Income tax | $90,000 (salary sacrifice reduces it) |
| HECS repayment | $100,000 (the sacrifice is added back) |
You do not pay it as a separate bill. Your employer withholds extra tax through the year based on your expected income, and it is reconciled when you lodge your return. If too much was withheld you get it back as a return; if too little, you need to top up.
The marginal system: no more repayment cliffs
This is a change that impacted most people with a HECS debt, and it landed on 1 July 2025.
Under the old system, crossing a threshold applied a single rate to your whole income. Earn a dollar over a bracket and that higher rate hit every dollar you earned, not just the last one. It created cliffs, where a small pay rise could cost you hundreds of dollars in extra repayments and leave you worse off after a pay raise.
The newer marginal system fixes that. It works a little like income tax: each rate only applies to the income inside its band. A pay rise now only ever lifts the repayment on the new dollars, never the ones below. You don’t get extra penalised for getting a raise.
HECS repayment thresholds and rates (2026-27)
The minimum threshold is $69,528 for 2026-27, up from $67,000 in 2025-26. It is indexed each year, so it drifts up with wages.
| Repayment income | You repay |
|---|---|
| Up to $69,528 | Nil |
| $69,528 to $129,717 | 15c per $1 over $69,528 |
| $129,718 to $186,050 | $9,028, plus 17c per $1 over $129,717 |
| Over $186,050 | 10% of your whole income |
The top band is the one slight difference. Above $186,050 you pay a flat 10% of your entire repayment income, not a marginal slice, because at that point 10% of the whole is more than the bands below would add up to. For almost everyone, the 15c band is the one that applies.
To see that band in action: on a $90,000 income you are $20,472 over the $69,528 threshold, and at 15c in the dollar that comes to $3,071 for the year.
What that looks like at a few salaries (2026-27, from Orbit's calculator):
| Salary | Yearly repayment | Per week |
|---|---|---|
| $70,000 | $71 | ~$1 |
| $80,000 | $1,571 | ~$30 |
| $90,000 | $3,071 | ~$59 |
| $110,000 | $6,071 | ~$117 |
| $140,000 | $10,776 | ~$207 |
The repayment climbs fast with income because it only applies above the threshold. At $70,000 you are barely over it, so you repay almost nothing. By $90,000 the gap has widened, and so has the repayment.
The 20% HECS debt cut
In June 2025 the Government applied a one-off 20% reduction to every HELP and HECS balance, calculated on what you owed at 1 June 2025, before that year's indexation. It was automatic. You did not need to apply, and it showed up on your ATO account without you doing anything.
If you have looked at your balance recently and it seemed lower than you remembered, this is usually why. The cut reduced the debt itself, not your repayment rate, so what you repay each year still comes from the income table above.
Indexation: how the balance grows
Your HECS debt does not charge interest, but it is indexed once a year on 1 June to keep pace with the cost of living. That indexation is the thing that slowly grows the balance over time.
Since a reform in 2023, indexation uses the lower of the Consumer Price Index (CPI) and the Wage Price Index, backdated to 2023. Before that it tracked CPI alone, which spiked painfully in 2023 and caught a lot of people out.
Two things worth understanding: your repayment comes out through the year based on your income, while indexation is applied once a year to whatever balance is left. If your compulsory repayments are small and indexation outpaces them, the balance can still tick up even as you pay, which is why some people choose to make voluntary repayments before the 1 June date.
Should you pay it off early?
For most people, there’s no rush. HECS is the cheapest debt you will ever hold. It charges no interest, only indexation, and indexation has been modest since the lower-of-CPI-or-WPI rule came in. Money that would clear a HECS balance often does more in an offset account, a mortgage, or inside your super.
There is one timing angle worth knowing. A voluntary repayment made before 1 June reduces the balance that gets indexed, so it saves you that year's indexation on the amount you pay. If you were going to pay some off anyway, before 1 June is better than doing it after. But clearing it purely to be rid of it, when the money could work harder elsewhere, is usually a feeling rather than a calculation. Run the numbers before you commit paying an additional lump sum.
Model your own repayment
Your repayment is based entirely on your income, and the thresholds move each year, so a general rule only gets you close. Put your own salary in.
Work out your HECS repayment in Orbit's calculator →
It uses the current 2026-27 thresholds, shows the exact band you fall in, and pairs with the take-home pay calculator if you want your full net pay after tax, Medicare and HECS together.
Frequently asked questions
What is the HECS repayment threshold for 2026-27?
$69,528. You repay nothing below it. Above it, you repay 15c on each dollar over the threshold, rising to 17c and then a flat 10% of your whole income at higher incomes.
How much HECS do I repay on $90,000?
About $3,071 in 2026-27, or roughly $59 a week, withheld through your pay. It is 15c on each dollar between $69,528 and $90,000.
Did HECS really get cut by 20%?
Yes. A one-off 20% reduction was applied to all HELP and HECS balances as they stood on 1 June 2025, before indexation. It was automatic.
Is HECS repayment based on my income or my debt?
Your income. Two people on the same salary repay the same amount regardless of how much they still owe. The balance only affects how long it takes to clear.
Does HECS charge interest?
No interest, but it is indexed once a year on 1 June to keep pace with prices. Since 2023 that indexation uses the lower of CPI and the Wage Price Index. The 1 June 2025 figure was 2.8%.
Should I pay off my HECS early?
Usually there is no hurry, since it is interest-free and indexation is modest. If you do pay a lump sum, doing it before 1 June saves that year's indexation on the amount. Compare it against putting the money in an offset, mortgage or super first.
General information only, current as of 29 July 2026 for the 2026-27 year. It is not personal tax advice. Verify current thresholds at ato.gov.au or with a registered tax agent.
