HECS-HELP Repayment Calculator
Calculate your HECS-HELP repayments under the new 2025-26 marginal rate system and compare with the old model.
Your Income
Your HECS Debt
Your annual repayment
$33 / month
Under old system
Estimated payoff
Projected Payoff Timeline
| Year | Income | Repayment | Indexation | Balance |
|---|---|---|---|---|
| 1 | $75,000 | $391 | $1,050 | $30,659 |
| 2 | $77,250 | $470 | $1,073 | $31,262 |
| 3 | $79,568 | $552 | $1,094 | $31,804 |
| 4 | $81,955 | $647 | $1,113 | $32,270 |
| 5 | $84,413 | $748 | $1,129 | $32,651 |
| 6 | $86,946 | $862 | $1,143 | $32,933 |
| 7 | $89,554 | $981 | $1,153 | $33,105 |
| 8 | $92,241 | $1,115 | $1,159 | $33,148 |
| 9 | $95,008 | $1,256 | $1,160 | $33,053 |
| 10 | $97,858 | $1,412 | $1,157 | $32,797 |
How the New HECS Marginal System Works
Starting from 1 July 2025, the Australian Government replaced the old HECS-HELP "cliff-edge" repayment system with a new marginal rate model. Under the old system, once your income crossed a threshold, the repayment rate applied to your entire repayment income. This caused sudden jumps in repayments - earning just $1 more could mean hundreds of dollars in extra repayments.
The new system works like income tax brackets: each rate applies only to the portion of income within that bracket. This means your repayments increase gradually as your income rises, with no sudden jumps. For most borrowers, this results in lower annual repayments compared to the old system.
The minimum repayment threshold remains at $54,435. If your repayment income is below this amount, you do not need to make any compulsory repayments. Above this threshold, marginal rates start at 1% and increase up to 10% for income above $159,664.
HECS Repayment Rate Table 2025-26
| Income from | Income to | Marginal rate |
|---|---|---|
| $0 | $54,434 | 0% |
| $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% |
Old vs New HECS Repayment System
Old System (Before July 2025)
- Cliff-edge model
- Rate applies to ENTIRE income
- Earning $54,435 = $544 instant repayment
- $0 to $544 jump from $1 more income
New System (From July 2025)
- Marginal bracket model
- Rate applies only to income IN that bracket
- Smooth, proportional increases
- 3 million Australians pay less
The new marginal system, effective from 1 July 2025, eliminates these cliff edges entirely. Instead of applying the rate to your whole income, each rate applies only to the portion of income within that bracket - exactly like income tax brackets. This means your repayments increase smoothly and proportionally as your income rises. The result is that most borrowers, particularly those earning between $54,000 and $100,000, will see lower annual repayments under the new system. Higher-income earners (above approximately $140,000) may see similar or slightly higher repayments, but the transition between brackets is always gradual.
The minimum repayment threshold remains at $54,435 under the new system, and the maximum rate remains at 10% for income above $159,664. The key improvement is fairness: borrowers are no longer penalised for small income changes, and the system is more predictable for financial planning purposes. The government estimated that approximately three million Australians with HELP debt would benefit from lower repayments under the new model.
How HECS-HELP Indexation Works
$2,100
Old CPI indexation (7%)
on $30k debt
$1,050
New WPI-capped (3.5%)
on $30k debt
Pro tip: Indexation is applied to your outstanding balance on 1 June each year, before your compulsory repayment for that financial year is credited. This means that if you make voluntary repayments before 1 June, you reduce the balance that indexation applies to. For example, making a $5,000 voluntary payment in May reduces the balance that gets indexed, saving you the indexation that would have been charged on that $5,000. This is why some financial advisors recommend timing voluntary repayments for April or May to maximise the indexation savings.
HECS-HELP debts are indexed (increased) each year on 1 June to maintain their real value relative to inflation. From the 2023-24 financial year onwards, the indexation rate is the lower of CPI (Consumer Price Index) or the Wage Price Index (WPI). This change was a significant win for borrowers - previously, indexation was based on CPI alone, which in 2023 reached 7.1% and added thousands of dollars to outstanding HELP balances.
The WPI cap means indexation is now more closely tied to wage growth rather than inflation spikes. In most years, the WPI runs between 3% and 4%, making it a more stable and predictable measure. For a borrower with a $30,000 HELP debt, the difference between 7% CPI indexation ($2,100) and 3.5% WPI-capped indexation ($1,050) is substantial - saving over $1,000 in a single year.
Strategies to Pay Off HECS-HELP Faster
Make Voluntary Repayments Before June
Because indexation is applied on 1 June each year, any voluntary payments made before this date reduce the balance that gets indexed. There is no bonus for voluntary repayments (the 5% discount was removed in 2017), but the indexation savings can be meaningful. On a $40,000 balance with 3.5% indexation, paying $10,000 before June saves $350 in indexation in that year alone.
Weigh Up: Pay Off HECS vs Invest
HECS-HELP is one of the cheapest forms of debt available - it charges no interest, only indexation (which is capped at the lower of CPI or WPI). If the indexation rate is 3.5%, and you could earn a higher return by investing that money elsewhere (for example, in shares or superannuation), it may be mathematically better to let your HECS repay itself through compulsory repayments and invest your spare cash instead. However, there is a psychological benefit to being debt-free, and eliminating HECS frees up cash flow that can be redirected to savings or a home deposit.
Clear HECS Before a Home Loan
Your HECS-HELP debt directly affects your borrowing power when applying for a home loan. Banks factor in your compulsory HECS repayment as a monthly financial commitment, which reduces your surplus income and therefore the maximum loan amount you qualify for. At an income of $90,000, your HECS repayment would be approximately $4,500 per year or $375 per month - this alone could reduce your borrowing power by $50,000 to $60,000. If you are planning to buy a home, reducing or eliminating your HECS balance before applying can meaningfully increase the amount a bank will lend you.
How This Calculator Works
This HECS-HELP calculator uses the official 2025-26 marginal repayment brackets published by the Australian Taxation Office. It calculates your annual compulsory repayment under the new marginal system and compares it with what you would have paid under the old cliff-edge model. The projected payoff timeline factors in your assumed salary growth rate and the annual indexation applied to your balance on 1 June each year. All calculations are estimates - your actual repayment will be determined by the ATO based on your tax return.