HECS Repayment Brackets 2026-27: New Marginal System
Key takeaways
- For 2026-27 nothing is repaid on repayment income up to $69,528.
- Income between $69,528 and $129,717 is repaid at 15c per dollar over the threshold; the next band adds 17c per dollar.
- Above $186,050 the repayment is 10% of total repayment income, the same as the old top rate.
- At $75,000 the compulsory repayment fell from about $2,625 under the old flat rates to about $821 in 2026-27.
HECS repayment brackets for 2026-27 start at $69,528 of repayment income. Above that you repay 15 cents per dollar up to $129,717, then $9,028 plus 17 cents per dollar up to $186,050, and 10% of your whole repayment income above that. The old flat-percentage brackets, where one rate hit your entire income, no longer apply.
The Australian Taxation Office (ATO) collects every HECS-HELP repayment through the tax system, and the Department of Education sets the loan rules. From the 2025-26 income year the brackets stopped working like a staircase and started working like income tax: each rate only touches the slice of income inside its band. This guide sets the old system and the new marginal system side by side at five real incomes, so you can see exactly what changed for your pay.
HECS repayment brackets 2026-27 at a glance
The table below shows the compulsory repayment bands the ATO publishes for 2026-27, alongside 2025-26, the first year of the marginal model. Thresholds are indexed each year, so the dollar figures move while the 15%, 17% and 10% rates stayed the same. Check the ATO's study and training loan repayment thresholds and rates page before relying on any figure, because it is the official source.
| Repayment income | 2026-27 compulsory repayment | 2025-26 compulsory repayment |
|---|---|---|
| Up to the minimum threshold | Nil (up to $69,528) | Nil (up to $67,000) |
| Middle band | 15c for each $1 over $69,528 (to $129,717) | 15c for each $1 over $67,000 (to $125,000) |
| Upper band | $9,028 plus 17c for each $1 over $129,717 (to $186,050) | $8,700 plus 17c for each $1 over $125,000 (to $179,285) |
| Top band | 10% of total repayment income above $186,050 | 10% of total repayment income above $179,285 |
If you want to plug in your own salary, our current HECS repayment rates page runs the same bands with your figures and shows the per-pay amount.
The same thresholds apply to every study and training support loan: HECS-HELP, FEE-HELP, VET Student Loans, the Student Financial Supplement Scheme, the Australian Apprenticeship Support Loan and the Trade Support Loan. If you hold more than one of these, you make a single compulsory repayment against the combined balance, not one per loan.
How the old flat-percentage brackets worked
Until the end of 2024-25 the ATO used a table of roughly 18 income bands. Your repayment income decided which band you fell into, and that band's percentage was applied to your entire repayment income, not just the part above the threshold. The 2024-25 table looked like this:
| 2024-25 repayment income | Rate applied to whole income |
|---|---|
| Below $54,435 | Nil |
| $54,435 – $62,850 | 1.0% |
| $62,851 – $66,620 | 2.0% |
| $66,621 – $70,618 | 2.5% |
| $70,619 – $74,855 | 3.0% |
| $74,856 – $79,346 | 3.5% |
| $79,347 – $84,107 | 4.0% |
| $84,108 – $89,154 | 4.5% |
| $89,155 – $94,503 | 5.0% |
| $94,504 – $100,174 | 5.5% |
| $100,175 – $106,185 | 6.0% |
| $106,186 – $112,556 | 6.5% |
| $112,557 – $119,309 | 7.0% |
| $119,310 – $126,467 | 7.5% |
| $126,468 – $134,056 | 8.0% |
| $134,057 – $142,100 | 8.5% |
| $142,101 – $150,626 | 9.0% |
| $150,627 – $159,663 | 9.5% |
| $159,664 and above | 10.0% |
The cliff problem
Because each percentage applied to the whole income, crossing a band edge by a single dollar could cost hundreds. At $62,850 the old repayment was 1% of $62,850, or $628.50. At $62,851 it became 2% of $62,851, about $1,257. One extra dollar of income added roughly $628 of HECS. Every band edge had a smaller version of the same jump, which is why people talked about "HECS cliffs" and why salary sacrifice and deduction timing were often used to sit just under a band.
The new marginal system explained
The change came from the Universities Accord reform package, legislated alongside the one-off 20% reduction to student loan balances. Two things changed at once from 1 July 2025.
- A much higher starting point. The minimum threshold jumped from $54,435 to $67,000 in 2025-26, and indexation took it to $69,528 for 2026-27.
- Marginal, not whole-income, rates. The 15% and 17% rates apply only to the slice of income above each threshold, the same way the income tax brackets work.
The $9,028 figure in the upper band is simply 15% of the full middle band ($129,717 minus $69,528 = $60,189, times 15% = about $9,028). It is the amount you have already repaid by the time you reach the second threshold, carried forward so the formula stays continuous.
Why the top band is still a flat 10%
Above $186,050 the rule switches back to 10% of total repayment income. That looks like a return of the cliff, but the thresholds are set so the two formulas almost meet. At $186,050 the marginal formula gives $9,028 plus 17% of $56,333, or about $18,605. At $186,051 the 10% rule gives about $18,605 as well. The switch is designed to be close to seamless, so there is no meaningful cliff at the top either. Very high earners effectively repay the same 10% they always did.
Old vs new HECS brackets at five incomes
This is the comparison most guides skip. The table applies the 2024-25 flat-percentage brackets, the 2025-26 marginal bands and the 2026-27 marginal bands to the same five repayment incomes. Figures are rounded and illustrative; your real repayment depends on your full repayment income for the year and your remaining balance.
| Repayment income | Old system (2024-25 rates) | 2025-26 marginal | 2026-27 marginal | 2026-27 as % of income |
|---|---|---|---|---|
| $60,000 | $600 (1%) | $0 | $0 | 0% |
| $75,000 | $2,625 (3.5%) | $1,200 | about $821 | about 1.1% |
| $100,000 | $5,500 (5.5%) | $4,950 | about $4,571 | about 4.6% |
| $130,000 | $10,400 (8%) | $9,550 | about $9,076 | about 7.0% |
| $190,000 | $19,000 (10%) | $19,000 | $19,000 | 10% |
What the comparison tells you
- Low and middle earners gain the most. At $75,000 the compulsory repayment fell from about $2,625 under the old rates to roughly $821 in 2026-27. At $60,000 it disappears.
- The saving narrows as income rises. At $130,000 the difference is about $1,300 a year; at $190,000 it is nil.
- Lower repayments are not a discount. Your debt is the same; you simply repay it more slowly. A smaller annual repayment can mean more years of indexation on 1 June, which is covered in our guide to HECS indexation.
What counts as repayment income
The brackets apply to repayment income, not your salary alone. Repayment income is your taxable income plus any of these that apply to you:
- reportable fringe benefits shown on your income statement (common with salary packaging and novated leases);
- total net investment losses, including negative gearing on a rental property;
- reportable super contributions, such as salary-sacrificed super;
- exempt foreign employment income.
This is why salary sacrifice rarely lowers HECS the way people expect: the sacrificed super is added back as a reportable contribution. Rental losses are added back too. If your repayment income lands just above $69,528, even a modest fringe benefit amount can move you into the 15% band.
How the brackets reach your pay packet
Employers withhold an estimate of your HECS repayment each pay using the ATO's study and training loan withholding schedule, which was rewritten for the marginal model. Tick "yes" to the study loan question on your Tax file number declaration and the extra withholding starts. At tax time the ATO compares what was withheld with the compulsory repayment calculated from your actual repayment income for the year.
| Situation | What happens at tax time |
|---|---|
| Withholding roughly matches the bracket calculation | Small refund or small amount owing |
| Two jobs, both withholding tax-free threshold | Under-withholding is likely; expect a bill |
| Income fell below $69,528 for the year | Compulsory repayment is nil; withheld amounts are credited back |
| Large side income not covered by PAYG | Repayment is raised on your notice of assessment |
| Debt fully repaid during the year | Repayment is capped at the balance owing |
If your balance is small and you want to finish early, a voluntary payment before 1 June stops indexation on what you pay off. For the full timeline, see our pages on HECS withholding per pay cycle and the HECS repayment threshold history on this site.
Planning around the new brackets
A few practical points follow from the marginal model:
- Pay rises are safe. A raise now costs at most 15c or 17c per extra dollar in HECS, never a lump jump, so there is no reason to turn one down or to game a band edge.
- Two-job workers should check withholding. The withholding schedule assumes one employer. If both jobs withhold, the total can overshoot or undershoot.
- Balance matters more than bracket. With lower repayments, a large balance can outlast several indexation cycles. Estimate how long payoff will take before assuming the debt will vanish on its own.
- Thresholds change every 1 July. The 2027-28 figures will be indexed again, so revisit your numbers each year rather than locking in today's.
Effective HECS rates under the marginal repayment system
Because the marginal repayment system only charges 15c or 17c on part of your income, your effective HELP debt repayment rate (the repayment divided by your whole repayment income) is much lower than the headline band rate. The table shows the effective rate across a wider set of incomes for 2026-27, so you can see how gently it now climbs.
| Repayment income (2026-27) | Compulsory repayment | Effective rate on whole income | Per fortnight (approx.) |
|---|---|---|---|
| $70,000 | about $71 | about 0.1% | about $3 |
| $80,000 | about $1,571 | about 2.0% | about $60 |
| $90,000 | about $3,071 | about 3.4% | about $118 |
| $110,000 | about $6,071 | about 5.5% | about $233 |
| $150,000 | about $12,476 | about 8.3% | about $480 |
| $186,050 | about $18,605 | about 10.0% | about $716 |
The per-fortnight column simply divides the annual figure by 26. Actual withholding follows the ATO's pay-period schedule and rounds differently, so your payslip will not match to the dollar.
How the HECS repayment thresholds 2026-27 compare with earlier years
The HECS repayment thresholds for 2026-27 are the second set issued under the new model. Before 2025-26 the minimum threshold was indexed each year from a much lower base: $51,550 in 2023-24 and $54,435 in 2024-25. The jump to $67,000 in 2025-26 was a policy change rather than normal indexation, and the rise to $69,528 for 2026-27 is ordinary indexation on top. The practical effect is that tens of thousands of lower-income graduates who used to repay 1% to 2.5% of their whole income now repay nothing, or only a few hundred dollars.
One thing did not change: HELP debt repayment rates still stop at 10%, and the top band still applies that 10% to your entire repayment income. If you earn well above $186,050, the reforms leave your annual repayment where it was.
All figures here reflect the ATO's published 2026-27 settings as at September 2026. Policy can change in a federal Budget, so treat this as general information and confirm your own position with the ATO or a registered tax agent.
Frequently asked questions
What are the HECS repayment brackets for 2026-27?
Nil up to $69,528; 15c per $1 over $69,528 up to $129,717; $9,028 plus 17c per $1 over $129,717 up to $186,050; and 10% of total repayment income above $186,050, per ATO published rates.
Is the new HECS system marginal like income tax?
Yes. Since 2025-26 the 15% and 17% rates apply only to the slice of repayment income above each threshold, so a pay rise no longer triggers a large jump in repayments.
Do I pay HECS if I earn under $69,528?
No compulsory repayment is due for 2026-27 if your repayment income is $69,528 or less. Anything withheld by your employer is credited back at tax time.
Does the lower repayment reduce my HECS debt?
No. The debt is unchanged; you simply repay it more slowly. Indexation still applies on 1 June to the outstanding balance.
What income is used for HECS repayments?
Repayment income: taxable income plus reportable fringe benefits, total net investment losses, reportable super contributions and exempt foreign employment income.
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Open the calculatorThis article is general information, not financial, tax or legal advice. Figures are approximate and change over time — always verify with a qualified professional or the official source before making a decision.
Written and reviewed by the HECS Debt Calculator editorial team. Facts checked against primary sources; see the reference above.