For FY2026-27 you repay nothing on a HECS or HELP debt below $69,528 of repayment income. Above that, repayment is marginal: 15c for each dollar over the threshold, rising to 17c above $129,717. Your balance is separately indexed every 1 June whether or not you repaid anything.
The system changed on 1 July 2025, and the change was large
Until FY2024-25, a compulsory repayment was a flat percentage of your entire repayment income, and the percentage stepped up at thresholds. That created a genuine cliff: earning one dollar more could move you a whole band and cost hundreds of dollars.
From FY2025-26 the calculation is marginal, like income tax. You repay only on the income above the threshold. An extra dollar earned above the threshold now costs 15c and nothing more.
| Repayment income (FY2026-27) | Compulsory repayment |
|---|---|
| $0 to $69,528 | Nil |
| $69,529 to $129,717 | 15c for each $1 over $69,528 |
| $129,718 to $186,050 | $9,028 plus 17c for each $1 over $129,717 |
| $186,051 and over | 10% of your total repayment income |
Note the top row is different in kind: above $186,050 the repayment reverts to a flat 10% of your whole repayment income, not a marginal slice.
Source: ATO, study and training loan repayment thresholds and rates. Checked 21 August 2026.
What the thresholds moved to for FY2026-27
The thresholds are indexed annually. The minimum went from $67,000 in FY2025-26 to $69,528 in FY2026-27, so a person on the same salary repays less this year than last.
| Repayment income | Repayment FY2025-26 | Repayment FY2026-27 | FY2026-27 per fortnight |
|---|---|---|---|
| $60,000 | $0 | $0 | $0 |
| $70,000 | $450 | $71 | $3 |
| $80,000 | $1,950 | $1,571 | $60 |
| $90,000 | $3,450 | $3,071 | $118 |
| $100,000 | $4,950 | $4,571 | $176 |
| $120,000 | $7,950 | $7,571 | $291 |
| $140,000 | $11,250 | $10,776 | $414 |
| $190,000 | $19,000 | $19,000 | $731 |
Repayment income is not your salary
This is the most consequential detail on this page. The ATO calculates your repayment on repayment income, which is your taxable income plus:
- reportable fringe benefits, regardless of whether your employer is exempt
- total net investment loss, including net rental losses
- reportable super contributions, which includes salary sacrifice
- exempt foreign employment income
Two practical consequences. Salary sacrificing into super lowers your taxable income but does not lower your HECS repayment, because the sacrificed amount is added straight back. And negatively gearing a property reduces your tax but not your study debt repayment. People who set up either arrangement expecting it to reduce their HECS are routinely surprised.
Indexation, and why the timing feels unfair
Your outstanding balance is indexed on 1 June each year. That happens whether or not you made repayments during the year.
Here is the sequence that causes the complaints. Your employer withholds extra tax through the year because you declared the debt, but that money is not applied to your loan as it goes: it sits as a credit against your tax bill. The compulsory repayment is only calculated and applied to your balance when your return is processed, typically in July or later. Indexation, meanwhile, hits on 1 June. So the amount indexed includes money you have effectively already paid but which has not yet been credited to the loan.
A voluntary repayment made before 1 June reduces the balance that gets indexed, which is the only mechanism available to avoid indexation on that amount. Whether that is a better use of money than anything else you could do with it depends on the indexation rate that year and your alternatives, and that is a question for a licensed financial adviser rather than for a calculator.
Common questions of fact
- There is no interest on a HELP debt. There is indexation, which adjusts the balance for changes in prices. It is not the same thing as an interest rate, though it has a similar effect on what you owe.
- Living overseas does not suspend it. Australians with a study loan living abroad have to report worldwide income and may have a compulsory repayment obligation.
- The debt does not survive you. A HELP debt is written off on death and is not payable from the estate.
- It affects borrowing capacity. Lenders treat compulsory repayments as a committed outgoing when assessing a mortgage, which is a real cost even while the debt itself is cheap.
Frequently Asked Questions
What is the HECS repayment threshold for 2026-27?
$69,528 of repayment income. Below that there is no compulsory repayment. Above it you repay 15c for each dollar over the threshold, rising to 17c above $129,717. In FY2025-26 the threshold was $67,000.
Does salary sacrificing reduce my HECS repayment?
No. Reportable super contributions, which include salary sacrifice, are added back when the ATO works out your repayment income. Salary sacrifice lowers your income tax but leaves your compulsory HECS repayment unchanged.
Is HECS interest free?
There is no interest, but the balance is indexed on 1 June each year to keep pace with prices. In effect the debt grows if you are not repaying faster than indexation, even though no interest rate is charged.
Should I pay off my HECS early?
A voluntary repayment before 1 June reduces the balance that gets indexed, which is the only way to avoid indexation on that amount. Whether it beats other uses of the money depends on the indexation rate and your alternatives. We are not licensed to advise on that, so it is a question for a financial adviser.
Why did my HECS balance go up when I have been paying it?
Because indexation is applied on 1 June, but the compulsory repayments withheld from your pay are only credited to the loan when your tax return is processed, usually in July or later. For a few weeks each year the balance being indexed includes amounts you have already effectively paid.
A note on what this is
This guide is general information built from the ATO's published material. It is not tax or financial advice, and it cannot take your circumstances into account. Clearway Apps is not a registered tax agent. Where a decision matters, check it against the ATO page linked in each section or talk to a registered tax agent.