HECS-HELP Repayment Thresholds 2026-27: When You Start Paying Back

If you studied at an Australian university, there’s a good chance you have a HECS-HELP debt. In fact, more than 3 million Australians carry a HELP loan, with the average debt around $26,500 (source: ATO, 2026). While you don’t pay interest in the traditional sense, your debt is indexed to inflation, and once your income passes a certain threshold, compulsory repayments kick in through the tax system.

The 2026-27 financial year brings updated thresholds under the marginal repayment system that replaced the old flat-rate scale. Understanding when repayments start, how much gets deducted from your pay, and whether voluntary repayments make sense can help you manage your debt effectively and avoid surprises at tax time.

How HECS-HELP Repayments Work

HELP debts are repaid through the tax system. Unlike a bank loan where you make monthly payments, your HELP repayment is calculated as a percentage of your “repayment income” and collected by the ATO when you lodge your tax return. The key concepts are:

• Repayment income: This is your taxable income plus reportable fringe benefits amounts, reportable super contributions, and any total net investment losses. It’s a broader measure than just taxable income, which means your repayment income is usually higher than what appears on your payment summary as taxable income.
• Compulsory repayment: Calculated as a percentage of your repayment income. The percentage increases with income.
• Employer withholding: Your employer withholds additional tax for HELP (the STSL component — Study and Training Support Loans) from your pay if you’ve indicated you have a HELP debt on your TFN declaration.
• Indexation: Your debt balance increases on 1 June each year in line with inflation (CPI).
• Voluntary repayments: You can make extra payments at any time, but there’s no longer any bonus or discount for doing so.

The repayment system is progressive: the more you earn, the higher the percentage of your income that goes toward your HELP debt. This means a promotion or pay rise not only increases your tax but may also increase your HELP repayment rate, resulting in a smaller-than-expected boost to your take-home pay.

2026-27 Repayment Thresholds and Rates

From the 2025-26 financial year the compulsory repayment system changed shape: it is now marginal. Instead of applying a single percentage to your entire repayment income, the ATO charges a rate only on the income above each threshold. This removed the old “cliff” where earning one extra dollar could push your whole income into a higher flat rate. Here are the 2026-27 thresholds (source: ATO, as at July 2026):

HELP Repayment Rate Card — 2026-27:

• $0 – $69,528: no compulsory repayment
• $69,529 – $129,717: 15% of the amount over $69,528
• $129,718 – $186,050: $9,028 plus 17% of the amount over $129,717
• $186,051 and above: 10% of your total repayment income

Note the structure of the top band. Below $186,051 the rates apply marginally, but once repayment income passes $186,050 the calculation switches to a flat 10% of the whole repayment income. That is the only remaining step in the system, and it is why a repayment income just above $186,050 produces a noticeably larger bill than one just below it.

Real-World Examples

Example 1: Graduate earning $70,000

Repayment income: $70,000. Only the amount above $69,528 is charged, so the calculation is ($70,000 − $69,528) × 15% = $71 for the year. Under the old flat-rate system the same income would have triggered a repayment of well over $1,000, because the rate applied to every dollar. This is the single biggest practical effect of the marginal system: repayments now start gently just above the threshold rather than landing as a lump sum.

Example 2: Senior professional earning $110,000

Repayment income: $110,000. The calculation is ($110,000 − $69,528) × 15% = $6,071 for the year, or roughly $234 per fortnight of STSL withholding. Combined with income tax of approximately $23,520 and the Medicare levy of $2,200, total tax plus HELP comes to about $31,791, leaving take-home pay of approximately $78,209.

Example 3: High-income earner at $160,000

Repayment income: $160,000. This sits in the third band, so the calculation is $9,028 plus 17% of the amount over $129,717 — that is, $9,028 + ($30,283 × 17%) = $14,176 for the year. Combined with income tax of approximately $40,270 and the Medicare levy of $3,200, total deductions are about $57,646 and take-home pay is approximately $102,354.

If this person owes $30,000 in HELP debt, they will clear it in a little over two years at this rate. On an $80,000 debt it takes roughly six years, because indexation offsets part of each year’s progress.

Example 4: Crossing the $186,050 line

At a repayment income of $186,000 the marginal calculation gives $9,028 + ($56,283 × 17%) = $18,596. At $187,000 the flat top-band rule applies instead: 10% of the full $187,000 = $18,700. The step is small at that point, but it grows with income — at $250,000 the repayment is $25,000 flat. If your income is close to $186,050, it is worth knowing which side of the line you land on before you plan your cash flow.

The STSL Withholding: What Your Employer Deducts

If you’ve indicated on your TFN declaration that you have a HELP debt (or other study/training loan), your employer withholds an additional amount from each pay. This is the STSL component — Study and Training Support Loans.

The withholding is based on ATO tables that estimate your annual HELP repayment based on your current pay period earnings. The employer doesn’t know your actual debt balance or how much you’ve already repaid; they simply withhold based on your earnings as if you earned that amount for a full year.

At tax time, the ATO reconciles the total STSL withheld against your actual compulsory repayment. If too much was withheld, you get a refund. If not enough, you owe the difference. If your HELP debt is fully paid off during the year, any further withholding stops (once you update your TFN declaration) and any excess withholding is refunded.

Indexation: How Your Debt Grows

On 1 June each year, your outstanding HELP debt balance is indexed to reflect changes in the cost of living, as measured by the Consumer Price Index (CPI). The indexation rate is based on the CPI figures for the March quarter.

The rate for any given year is set from the March-quarter figures and published by the ATO shortly before it is applied, so the exact percentage for 1 June 2026 should be read from the ATO’s own indexation page rather than estimated in advance.

A significant legislative change in 2024 means that indexation is now capped at the lower of the CPI and the Wage Price Index (WPI). This was a retrospective change designed to protect borrowers from very high indexation rates when inflation spiked. If CPI exceeds WPI, the indexation is limited to WPI. This change was applied retrospectively, meaning some borrowers received credits for over-indexation applied in prior years.

Indexation only applies to the portion of the debt that is older than 11 months at 1 June. Any amounts incurred in the most recent study periods or recent voluntary repayments are not indexed until the following year.

Voluntary Repayments

You can make voluntary repayments to your HELP debt at any time through:

• myGov (ATO online services)
• BPAY (bill code available from the ATO)
• Credit/debit card

The upfront payment discount — previously 10% for HECS debts and 5% for HELP — was abolished from 1 January 2023. There is no longer any financial incentive to make early repayments beyond reducing your debt balance. The only benefit of voluntary repayments is:

• Lower balance means less indexation applied in future years
• Potentially paying off the debt sooner
• Psychological satisfaction of being debt-free

Importantly, voluntary repayments do not reduce your compulsory repayment obligation for the current financial year. If your income triggers a compulsory repayment of $5,000, and you also make a voluntary repayment of $3,000, your total repayment for the year is $8,000 — the voluntary amount does not substitute for the compulsory amount.

Should you make voluntary repayments? In most cases, the financial case is weak. HELP debt is one of the cheapest forms of “borrowing” available — there’s no real interest, only indexation to inflation. If you could use that money elsewhere (save for a house deposit, invest, pay off higher-interest debt like credit cards), you’re generally better off doing that than paying down HELP early. The exception is if you’re about to reach a threshold where the debt will be paid off within 1-2 years anyway, and paying it off slightly early avoids one more round of indexation.

Moving Overseas With a HELP Debt

Since 1 July 2017, Australians living overseas with a HELP debt have the same repayment obligations as those living in Australia. You must:

• Notify the ATO of your overseas residency
• Lodge an overseas travel notification or update your contact details
• Report your worldwide income to the ATO each year
• Make compulsory repayments if your worldwide income exceeds the repayment threshold ($69,528 for 2026-27)

The repayment thresholds and rates are the same whether you live in Australia or overseas. If your worldwide income is below the threshold, no repayment is required, but you still must report.

Failure to comply can result in penalties, interest charges, and the ATO taking enforcement action. The government has data-matching arrangements with other countries’ tax authorities, making it increasingly difficult to avoid these obligations.

Death and Disability Discharge

In certain circumstances, HELP debts can be discharged (cancelled):

• Death: If a person with a HELP debt dies, the debt is cancelled. The estate is not required to repay it.
• Total and permanent disability: If you’re certified as being unlikely to ever be able to work again due to disability, you can apply to have your HELP debt discharged. This requires medical certification.

These provisions ensure that HELP debts don’t become a burden on estates or on individuals who can no longer work.

Salary Packaging and HECS

If you salary package (salary sacrifice), your HELP repayment is calculated on your repayment income, which includes reportable fringe benefits. This has an important implication: salary packaging can actually increase your HELP repayment obligation because the grossed-up value of fringe benefits is added to your repayment income, potentially pushing you into a higher repayment tier.

For example, if you earn $80,000 and salary package a car worth $15,000 in fringe benefits, your repayment income might be approximately $95,000 (including the grossed-up fringe benefit amount), pushing your repayment rate from 4% to 5.5%. This doesn’t mean salary packaging is a bad idea — the tax savings usually outweigh the higher HELP repayment — but it’s a factor to consider.

Use the Income Tax Calculator to see exactly how your HECS-HELP debt affects your take-home pay. Visit /calculators/income-tax/ and enter your income plus your HELP debt status for a detailed breakdown including STSL withholding.

Frequently Asked Questions

At what income do I start repaying my HECS debt in 2026-27?

Compulsory HECS-HELP repayments start once your repayment income passes $69,528 for the 2026-27 financial year. The system is marginal: you pay 15% of the amount above $69,528 up to $129,717, then $9,028 plus 17% of the amount above $129,717 up to $186,050, and once repayment income exceeds $186,050 the charge becomes a flat 10% of your total repayment income. Your repayment income is your taxable income plus any reportable fringe benefits amounts, reportable super contributions, and net investment losses.

How does HECS indexation work and what was the 2026 rate?

HELP debts are indexed on 1 June each year to maintain their real value against inflation. The indexation rate is based on the Consumer Price Index (CPI). On 1 June 2026, the indexation rate was applied based on CPI data from the March 2026 quarter. The 2025 indexation rate was approximately 3.8%, and for 2026 the rate is estimated in the range of 3-4%. The government has also retrospectively capped historical indexation to the lower of CPI and the Wage Price Index (WPI), which provided relief for borrowers who had been indexed at high CPI rates.

Can I make voluntary repayments and is there still a bonus?

Yes, you can make voluntary repayments to your HELP debt at any time through myGov or BPAY. However, the upfront payment discount (previously 10% for HECS and 5% for HELP) was abolished from 1 January 2023. There is no longer any financial bonus or discount for making voluntary repayments. The only benefit is reducing your debt balance, which means less indexation applied in future years and the possibility of paying off the debt sooner.

Do I still have to repay HECS if I move overseas?

Yes. Since 1 July 2017, Australian residents who move overseas with a HELP debt are required to make compulsory repayments based on their worldwide income. You must report your income to the ATO each year, and the repayment thresholds are the same as for residents living in Australia. If your worldwide income exceeds the minimum repayment threshold ($69,528 for 2026-27), you’re required to make repayments. Failure to report or repay can result in penalties.

Disclaimer: This article provides general estimates only and does not constitute financial, tax, or legal advice. Rates, thresholds, and rules change. Always refer to the ATO, your state revenue office, or a licensed professional for your specific circumstances. Last updated: July 2026.