HECS-HELP is Australia's income-contingent student loan system — one of the most borrower-friendly in the world. Understanding exactly how it works changes many people's approach to paying it off.
The key facts about HECS-HELP in 2026
| Feature | Detail |
|---|---|
| Repayment threshold | $54,435/year (2026-27) |
| Repayment rate | 1–10% of income (sliding scale based on income) |
| Interest charged | None — but indexed to CPI annually (June) |
| Deducted from pay | Yes — via PAYG withholding like tax |
| Affects credit score | No |
| Written off if | Death or permanent disability |
The CPI indexation issue
HECS-HELP doesn't charge interest — but it's indexed to CPI each year on 1 June. In 2023, CPI was 7.1%, meaning a $30,000 HELP debt jumped to $32,130 overnight. In years of high inflation, this can be significant. In low-inflation years (2-3%), it's much less concerning.
⚠️ The 2026 indexation rate matters for voluntary repayment decisions
If CPI in 2026 is 3%, your HELP debt grows by 3%. If your savings account earns 5%, you're mathematically better off keeping the money in savings and letting the mandatory repayments run their course.
Should you voluntarily repay HELP debt?
The maths is straightforward:
- If your high-interest savings account rate > CPI indexation rate: keep money in savings, let mandatory repayments chip away at HELP
- If CPI indexation rate > savings rate: voluntary repayment makes sense
- In 2026 with savings rates at 5%+ and CPI ~3%: savings wins, don't rush to repay
💡 The bonus for voluntary repayments used to exist — it doesn't anymore
Until 2017, the ATO offered a 5% bonus on voluntary HELP repayments of $500+. That incentive was removed. There's no administrative benefit to voluntary repayment today — the decision is purely mathematical (indexation vs savings/investment return).
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