HECS-HELP Debt

HECS-HELP (Higher Education Contribution Scheme - Higher Education Loan Program) is an Australian government loan system that allows eligible domestic university students to defer paying their tuition fees until they earn above a specified income threshold. HECS-HELP debts are technically interest-free, but are subject to annual indexation (adjustment) based on the Consumer Price Index (CPI) to maintain the loan's real value.

Repayments are compulsory once your income exceeds the annual repayment threshold ($54,435 for the 2026/27 financial year), and are calculated as a percentage of your taxable income through the PAYG tax system. Repayment rates range from 1% for incomes just above the threshold to up to 10% for very high earners. The Australian Taxation Office (ATO) automatically deducts your repayment from your salary throughout the year, similar to income tax withholding.

Real-World Example If Alex graduates with a $45,000 HECS-HELP debt and earns $70,000, their income is above the $54,435 threshold. Based on the repayment rate for their income bracket (approximately 3.5%), Alex must repay $2,450 annually, which is automatically deducted from their salary by their employer and paid to the ATO.