Summary
HECS-HELP is the Australian Government’s student loan scheme for higher education — eligible students in a Commonwealth Supported Place (CSP) at an Australian university can defer their tuition fees as a HECS-HELP debt, which is then repaid through the tax system once their income exceeds the compulsory repayment threshold; there is no interest — only annual indexation to maintain the debt’s real value
In 2026-27, the compulsory repayment threshold is $69,528 — below this income, no repayment is required; above it, repayments are calculated as a percentage of the income earned above the threshold (not the total income), ranging from 1% to 10%; repayments are automatically withheld from your pay by your employer and reconciled at tax time
In 2025, the Australian Government applied a one-off 20% reduction to all HECS-HELP debts — automatically applied by the ATO to balances as at 1 June 2025; no application was required; for the average debt of approximately $27,600, the cut wiped around $5,520 from the balance overnight
HECS-HELP is the reason a university degree in Australia does not require upfront payment. The Commonwealth Government pays your tuition fees directly to your university — you repay over time through your tax return, at a rate linked to your income, with no interest charged. If your income is low (or zero), you repay nothing that year.
For students from India, Nepal, the Philippines and other countries studying in Australia — understanding HECS-HELP is important for planning your finances during and after your studies.
What is HECS-HELP?
HECS-HELP stands for Higher Education Contribution Scheme — Higher Education Loan Program. It is one of several Australian Government HELP loan types:
- HECS-HELP — for domestic students in Commonwealth Supported Places (the most common type)
- FEE-HELP — for full-fee-paying domestic students
- OS-HELP — for approved overseas study
- SA-HELP — for student services and amenities fees
HECS-HELP is the most widely used — it covers the tuition component for students at Australian universities who are in a Commonwealth Supported Place (a subsidised study position where the Government pays most of the course cost).
Who is eligible:
- Australian citizens
- New Zealand Special Category Visa holders who meet specific residency requirements
- Permanent humanitarian visa holders
Who is NOT eligible:
- International students on student visas — international students pay full fees directly to the university and are not eligible for HECS-HELP
How does HECS-HELP work?
Step 1: Enrolment and census date When you enrol in a unit, the census date is typically 2-4 weeks into the semester. If you are in a Commonwealth Supported Place and choose to defer your fees using HECS-HELP, the debt is recorded after the census date for each unit. If you withdraw before the census date, you pay nothing.
Step 2: Government pays your university The Australian Government pays your student contribution amount directly to your university on your behalf. You owe that amount to the Government — not to your university.
Step 3: Debt is recorded by the ATO Your HECS-HELP debt accumulates with the Australian Taxation Office. You can check your current debt balance via myGov at any time.
Step 4: Annual indexation On 1 June each year, your HECS-HELP balance is indexed — adjusted upward in line with the lower of CPI or the Wage Price Index (WPI). This is not interest — it maintains the real value of the debt. From 1 June 2026, indexation was 2.8%. There is no compound interest.
Step 5: Repayment through the tax system You repay automatically through the tax system once your income exceeds the threshold. Your employer withholds a portion of your pay throughout the year (if you declare a HECS-HELP debt on your Tax File Number declaration). At tax time, the ATO reconciles the exact amount.
The 2026 repayment thresholds and rates
Repayments are calculated on the portion of income above the threshold — not on your total income. This marginal system was introduced from 1 July 2025 and makes repayments significantly lower for many earners compared to the previous flat-rate system.
2026-27 compulsory repayment threshold: $69,528
| Repayment income | Repayment rate |
|---|---|
| Below $69,528 | Nil |
| $69,528 to $80,000 | 1% of income above threshold |
| $80,001 to $95,000 | 2% of income above threshold |
| $95,001 to $110,000 | 2.5% of income above threshold |
| $110,001 to $135,000 | 3% of income above threshold |
| $135,001 to $160,000 | 3.5% of income above threshold |
| $160,001 to $185,000 | 4.5% of income above threshold |
| $185,001 and above | Up to 10% of income above threshold |
Note on threshold years: The threshold that applies is the one for the income year you earned the income in — not the year you lodge your tax return. The 2025-26 threshold ($67,000) applies to income earned from July 2025 to June 2026; the 2026-27 threshold ($69,528) applies from July 2026.
The 20% debt cut — what happened in 2025
In 2025, the Australian Government legislated a one-off 20% reduction on all HECS-HELP and other study support loan balances — one of the most significant changes to the student loan system in a generation.
Key facts:
- The cut was applied automatically by the ATO to debt balances as at 1 June 2025, before the annual indexation was added
- No application was required — the ATO processed it and sent notifications via SMS, email or myGov
- For the average debt of approximately $27,600, the 20% cut wiped around $5,520 from the balance
- If your balance went into credit as a result (e.g. you had recently made a large voluntary repayment), you may have received a refund
How HECS-HELP appears on your payslip
If you have a HECS-HELP debt, you must inform your employer by marking the relevant box on your Tax File Number (TFN) declaration form. Your employer will then withhold an additional amount from your regular pay — visible on your payslip as an additional withholding — to cover your estimated annual HECS-HELP repayment.
This is a withholding, not the actual repayment. Your exact repayment is calculated when you lodge your tax return. If too much was withheld, you get a refund. If too little, you owe the difference.
What to do when starting a new job:
- Complete a TFN declaration form
- Mark “Yes” to the HECS-HELP question
- Your employer will automatically adjust your withholding
Failing to declare a HECS-HELP debt does not cancel the obligation — it simply means you may owe a larger amount when you lodge your tax return.
HECS-HELP and working overseas
If you live or work overseas, your HECS-HELP obligation does not pause. You are required to lodge an Australian tax return and make compulsory repayments if your worldwide income exceeds the threshold.
Australians living overseas who do not lodge tax returns while their income exceeds the threshold may accumulate penalties and interest on outstanding repayments. The ATO has progressively tightened enforcement for overseas residents with HECS-HELP debts since 2017.
If you return to India, Nepal, the Philippines or another country after studying in Australia: Keep your myGov and ATO accounts accessible and lodge your Australian tax return annually if your income exceeds the threshold.
HECS-HELP and borrowing capacity
A HECS-HELP debt affects your borrowing capacity for a home loan. Australian banks and lenders are required to include your estimated HECS-HELP repayment in their serviceability assessment — it reduces the amount they will lend you.
Example: At an income of $90,000 with a HECS-HELP debt, your estimated annual repayment at 2026-27 rates would be approximately $408 (1% of $20,472 above the threshold). This reduces your assessed disposable income and therefore your maximum loan amount.
The impact is often smaller than borrowers expect — but it is a factor worth discussing with a mortgage broker before applying.
Voluntary repayments
You can make voluntary repayments on your HECS-HELP debt at any time — regardless of your income. There are no penalties for early repayment and no bonus for paying extra (a voluntary repayment bonus that once existed was removed in 2012).
Voluntary repayments reduce your outstanding balance and therefore reduce the amount subject to annual indexation. For people with larger debts, this can be financially beneficial when indexation is running above the threshold rate.
Make voluntary repayments via myGov or ATO online services, not to your employer.
HECS-HELP vs other Australian student loans
| Loan type | Who it’s for | Fees | Repayment |
|---|---|---|---|
| HECS-HELP | Domestic students in Commonwealth Supported Places | No upfront fees; government pays | Via tax system above threshold |
| FEE-HELP | Full-fee domestic students | No upfront fees; loan covers full fees | Via tax system above threshold |
| International student fees | International students | Full fees payable directly to university | Not through the Australian tax system |
FAQs (frequently asked questions)
What is HECS-HELP?
HECS-HELP is the Australian Government’s student loan scheme for domestic students in Commonwealth Supported Places. The government pays your tuition fees to your university; you repay through the tax system once your income exceeds the threshold. No interest — only annual indexation.
Who is eligible for HECS-HELP?
Australian citizens, permanent humanitarian visa holders and certain New Zealand Special Category Visa holders meeting residency requirements. International students on student visas are not eligible.
What is the HECS-HELP repayment threshold in 2026?
$69,528 for the 2026-27 income year (July 2026 to June 2027). The 2025-26 threshold was $67,000.
Is there interest on HECS-HELP?
No — HECS-HELP does not charge interest. The balance is indexed annually on 1 June (2.8% from June 2026) to maintain its real value. Indexation is not compound interest.
What was the 20% HECS debt cut?
In 2025, the Australian Government automatically reduced all HECS-HELP and student loan balances by 20% (based on balances at 1 June 2025). No application was required — the ATO processed it automatically.
Does HECS-HELP pause if I move overseas?
No. You are still required to lodge an Australian tax return and make repayments if your worldwide income exceeds the threshold. The ATO enforces overseas HECS-HELP obligations.
Related guides
- Understanding your Australian payslip →
- How to build a credit score in Australia →
- What is a tax file number (TFN)? →
- Australia tax return guide for migrants →
What it means for your transfers
HECS-HELP repayments reduce your take-home pay — meaning less to send home each month. OrbitRemit helps you make the most of what you do send: fee-free transfers from Australia to India, the Philippines, Nepal and Vietnam, with the rate locked at confirmation.
This guide is for general information and does not constitute financial or tax advice. HECS-HELP thresholds change annually — always verify at studyassist.gov.au and ato.gov.au. Last updated September 2026.
Sources: The University of Queensland — What is HECS and how does it work? (study.uq.edu.au, June 23, 2026) | H&R Block — Understanding HECS-HELP in Australia (hrblock.com.au, February 17, 2026) | taxbne.com.au — HECS Repayment Threshold 2026-27 (June 15, 2026) | fenro.com.au — HECS-HELP Debt Australia 2026 (May 6, 2026) | educationloan.com.au — HECS-HELP Guide Australia (April 29, 2026) | ATO — HELP repayment thresholds and rates (ato.gov.au official)
