HECS-HELP (student loan)
A government study loan you repay through the tax system.
HECS-HELP is the Australian government loan that covers your university tuition. It’s interest-free but indexed to inflation each year. You start repaying once your income passes a set threshold, at a percentage that rises with income — collected automatically through the tax system, a bit like extra tax.
Repayments are worked out on repayment income, which is broader than taxable income: it adds back reportable super contributions, reportable fringe benefits, net investment losses and exempt foreign income. Since 2025-26 the calculation is marginal — the rate applies only to the income above the threshold, rather than to every dollar you earn.
Worked example
On $80,000 of repayment income in 2026-27, with the minimum threshold at $69,528, you repay about $1,571 for the year — roughly 2% of your income, because only the amount above the threshold is counted.
Common mistake
Assuming the rate applies to your whole income. Under the older system, crossing a threshold by a dollar could cost hundreds; the marginal calculation means a small pay rise now only ever increases the repayment by a fraction of that rise.
Grounded in ATO guidance. Figures last checked . General information, not tax advice.
Related terms
Marginal tax rate
The tax rate on your next dollar of income.
PAYG (Pay As You Go)
Paying tax through the year rather than in one lump.
Superannuation guarantee (SG)
The compulsory super employers pay on top of wages.
Salary sacrifice
Redirecting pre-tax salary into super or a benefit.
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Questions about this term
HECS-HELP (student loan): common questions
- Does a HECS-HELP loan charge interest?
- No — it is interest-free, but the balance is indexed to inflation each year. You start repaying once your income passes a set threshold, at a percentage that rises with income, and the repayment is collected automatically through the tax system, a bit like extra tax.
- Is my HECS repayment based on my taxable income?
- Not quite — it is based on repayment income, which is broader. Repayment income starts from taxable income and adds back reportable super contributions, reportable fringe benefits, net investment losses and exempt foreign income. That is why two people with the same taxable income can end up with different repayments.
- How much would I repay on $80,000 of repayment income?
- About $1,571 for the 2026-27 year, with the minimum threshold at $69,528. That is roughly 2% of income, because since 2025-26 the calculation is marginal — the rate applies only to the amount above the threshold, not to every dollar. The income tax calculator on this site estimates the repayment for your own figures.
- Can crossing the HECS threshold by a dollar cost me hundreds?
- Not any more. Under the older system a dollar over a threshold could cost hundreds, because the rate applied to the whole income. The marginal calculation in place since 2025-26 means a small pay rise only ever increases the repayment by a fraction of that rise.
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