Looking for the repayment threshold?
Compulsory repayments start at $69,528 of repayment income in 2026-27, then rise through three marginal bands. The full ATO table, what counts as repayment income and the figures for every band live on one page.
HECS repayment threshold 2026-27What Is HECS-HELP?
HECS-HELP is the loan that covers the student contribution for a Commonwealth-supported place at an Australian university. It is one of several loans under the Higher Education Loan Program (HELP), alongside FEE-HELP for full-fee places, OS-HELP for study overseas and SA-HELP for student services and amenities fees.
What makes it unusual is that it is income-contingent. The government charges no interest and sets no repayment date. You repay nothing at all until your income reaches a threshold, and if it never does, you never make a compulsory repayment. The balance is instead adjusted once a year by indexation, which keeps its real value steady rather than growing it.
HELP is not the only loan the ATO collects this way. VET Student Loans, the old Student Financial Supplement Scheme, Student Start-up Loans, ABSTUDY SSL and the Australian Apprenticeship Support Loan all run on the same repayment machinery — our HECS repayment calculator sets out all six schemes and the order the ATO clears them in.
How a Repayment Reaches the ATO
Nothing about the process is manual. Your employer withholds an estimate each pay; the ATO works out the real number after you lodge; the difference lands in your refund or your bill.
- You declare the loan. Tick the study and training support loan box on your tax file number declaration when you start a job. Miss it and nothing is withheld all year.
- Your employer withholds. An extra PAYG amount is taken from each pay, shown on your payslip as STSL. It is calculated from that pay period’s earnings as though you earned the same amount every period.
- You lodge your return. The ATO works out your repayment income for the whole year — which is wider than salary — and applies the rates to it.
- The ATO reconciles. Withheld more than you owed? It comes back in your refund. Less? It is added to your bill. Multiple employers each withhold independently, which is the usual cause of a surprise.
- Your balance drops. The confirmed repayment is applied to your loan after the assessment issues, not during the year.
The gap between the payslip figure and the assessed figure is the single most common source of confusion. Our guide to STSL on your payslip works through a real payslip and explains how to stop the deduction once the loan is cleared.
How Indexation Works
Indexation is applied on 1 June each year, and only to the part of your balance that has been unpaid for more than 11 months. The rate is the lower of CPI or the Wage Price Index, which means a study loan cannot grow faster than wages.
That cap was introduced after the June 2023 indexation came in at 7.1% under a CPI-only formula. It was backdated, and the ATO recalculated both 2023 and 2024, crediting the difference to affected balances.
| Applied 1 June | Indexation rate | Note |
|---|---|---|
| 2026 | 2.8% | — |
| 2025 | 3.2% | — |
| 2024 | 4% | recalculated from 4.7% |
| 2023 | 3.2% | recalculated from 7.1% |
| 2022 | 3.9% | — |
| 2021 | 0.6% | — |
One quirk matters for timing. Compulsory repayments made through PAYG during the year are not credited to your loan until your return is assessed — usually after 1 June. So the balance that gets indexed is often larger than the balance you think you have.
Separately, every study and training support debt that existed on 1 June 2025 received a one-off 20% reduction. The ATO has finished processing it, and accounts left in credit were refunded.
Are Voluntary Repayments Worth It?
A voluntary repayment reduces the principal and nothing else. There is no discount or bonus for paying early — that ended years ago — so the whole decision is a rate comparison: 2.8000000000000003% indexation in 2026 against whatever else that money could do.
On those numbers, most other debt beats it. Credit cards, car loans and personal loans all cost several times the indexation rate, and clearing them first is straightforwardly better. The argument for paying down a study loan early is usually not the interest maths.
Where it does stack up:
- You are applying for a mortgage. Lenders treat the compulsory repayment as a fixed commitment and it reduces borrowing capacity, so clearing a small balance can buy back more than the indexation you save.
- The balance is nearly gone. Finishing it removes the STSL deduction from every pay for the rest of the year.
- You are leaving Australia. The obligation follows you, and reporting worldwide income each year from abroad is an ongoing chore.
Timing beats amount. Indexation is applied to the balance on 1 June. A payment on 31 May reduces what gets indexed; the same payment on 2 June does not. Allow processing time — BPAY to the ATO is not instant.
Weighing it against extra super instead? We modelled both in extra super vs HECS repayment, and note that salary sacrificing does not reduce your compulsory repayment — reportable super contributions are added back into repayment income.
What Happens If You Move Overseas?
The debt does not stay behind. If you have a HELP, VSL or AASL loan and you intend to reside outside Australia for 183 days or more in any 12-month period, you must lodge an overseas travel notification within 7 days of leaving and keep your contact details current with the ATO.
From then on you report your worldwide income each year by 31 October. If it is at or below 25% of the minimum repayment threshold, you lodge a non-lodgment advice instead. Above that, the same thresholds and rates that apply in Australia apply to your worldwide income, collected either as a compulsory repayment or as an overseas levy.
Non-residents choose one of three methods to work out the foreign-sourced part: simple self-assessment with a standard occupation-based deduction, the overseas assessed method using a foreign tax assessment, or a comprehensive tax-based assessment. Indexation continues on 1 June wherever you live.
Detail and forms: ATO, Overseas obligations when repaying loans.
Dates That Matter
| Date | What happens |
|---|---|
| Census date | Set by your university, per teaching period. Withdraw before it and no debt is incurred; withdraw after and the full subject cost is added. |
| Before 1 June | Last useful moment for a voluntary repayment to reduce the balance that gets indexed. |
| 1 June | Indexation applied to the part of the balance unpaid for more than 11 months. |
| 1 July | New income year. Thresholds and rates are re-indexed for the year ahead. |
| 31 October | Self-lodgers’ return deadline, and the deadline for reporting worldwide income from overseas. |
Where to Find the Numbers
This guide stays on how the loan behaves. The figures live on two purpose-built pages, both driven by the same verified ATO constants:
- HECS repayment threshold 2026-27 — the threshold, the marginal bands and what counts as repayment income.
- HECS repayment calculator — your exact repayment, plus all six loan schemes and the order they are repaid.
- STSL on your payslip — why the withheld amount differs from the assessed one.
- Take-home pay calculator — net pay with income tax, Medicare, super and the study loan together.
Frequently Asked Questions
HECS-HELP questions and answers
Does a HECS-HELP debt charge interest?
No. The government charges no interest on study and training support loans. The balance is adjusted once a year by indexation instead, at the lower of CPI or the Wage Price Index, which keeps its real value steady rather than growing it.
When is HECS debt indexed?
On 1 June each year, and only to the part of the balance that has been unpaid for more than 11 months. The rate applied on 1 June 2026 was 2.8000000000000003%.
Why did my balance go up even though I made repayments all year?
Compulsory repayments withheld through PAYG are not credited to your loan until your tax return is assessed, which is usually after 1 June. So the balance indexed on 1 June can be higher than the balance you expected. Voluntary repayments, by contrast, are applied when the ATO processes them.
Is it worth paying off HECS early?
There is no discount or bonus for voluntary repayments, so it is purely a rate comparison: 2.8000000000000003% indexation against what the money would earn or save elsewhere. Higher-cost debt like credit cards and car loans should come first. The strongest cases for paying early are an imminent mortgage application, a nearly-cleared balance, or moving overseas.
Do I still repay HECS if I live overseas?
Yes, for HELP, VSL and AASL debts. If you reside outside Australia for 183 days or more in any 12-month period you must lodge an overseas travel notification within 7 days of leaving, then report your worldwide income by 31 October each year. Below 25% of the minimum repayment threshold you lodge a non-lodgment advice instead. Indexation continues on 1 June wherever you live.
Does salary sacrifice reduce my HECS repayment?
No. Salary sacrificing into super lowers your taxable income, but reportable super contributions are added straight back when the ATO works out your repayment income. The repayment income test exists precisely to close that gap.
Are HECS repayments tax-deductible?
No. The ATO specifically excludes repayments under HELP (including HECS-HELP and FEE-HELP), SFSS, SSL, AASL and VET Student Loans from work-related self-education deductions. Other self-education costs such as textbooks or course fees you pay yourself may still be deductible.
What is the difference between HECS-HELP and FEE-HELP?
HECS-HELP covers the student contribution for a Commonwealth-supported place. FEE-HELP covers tuition for full fee-paying students who do not receive Commonwealth support. Both sit under the HELP umbrella and are repaid under identical thresholds and rates. Loan fees and lifetime limits differ and are set by the Department of Education, not the ATO.
How do I check my HELP balance?
Sign in to ATO online services through myGov, or use the ATO app, and open your study and training loan account. It shows the current balance, repayments credited and indexation applied. The balance updates after each year's assessment, not during the year.
How this guide is maintained▼
Indexation rates, the overseas reporting rules and the loan list come from the ATO pages cited below, read directly rather than summarised from secondary sources. Any threshold figure shown here is read from the same constants file that drives our calculator, so this page cannot disagree with it. Rates and thresholds are not restated in full here by design — they are maintained on the threshold page, which is the page we keep current each 1 July.
Sources & References
- 1Study and training loan indexation rates (QC18714)— Australian Taxation Office
- 2Overseas obligations when repaying loans (QC47358)— Australian Taxation Office
- 3Voluntary repayments— Australian Taxation Office
- 4Study and training loans – what's new (QC59241)— Australian Taxation Office
- 5Study and training loan repayment thresholds and rates (QC16176)— Australian Taxation Office
Last verified: 28 July 2026. Our content is based on the latest information from official Australian government sources.
James Harrington
Verified AuthorSenior Tax & Payroll Analyst
CPA, Registered Tax Agent (25787011)
James is a CPA-qualified tax professional with over 14 years of experience in Australian taxation and payroll systems. He spent six years at the Australian Taxation Office working on PAYG withholding and individual tax return processing before moving into financial publishing. He now leads the tax content at Pay Calculator Australia, translating complex ATO legislation into clear, actionable guidance.
Areas of Expertise