Do You Repay HECS While Still Studying? The Rules

The direct answer on HECS repayment while studying: you only repay if your income crosses the repayment threshold — enrolment status is irrelevant. Most full-time students earning under the threshold (approximately $67,000 for 2025-26) repay nothing. But if you work enough to cross it, compulsory repayments apply exactly as they would for a graduate, and your debt indexes every 1 June regardless.

How the System Actually Decides When You Repay

HECS-HELP is income-contingent, and "income-contingent" is the whole story. The Australian Taxation Office looks at one thing when you lodge your tax return: your repayment income (taxable income plus reportable fringe benefits, reportable super contributions, net investment losses and exempt foreign income). If that number is at or above the year's threshold, a compulsory repayment is calculated as a percentage of it. Nowhere in that calculation does the ATO ask whether you attended a lecture this year.

This surprises two groups of people. Full-time students with part-time jobs are relieved: a typical $25,000-40,000 of casual work sits well under the threshold, so nothing is repayable. Older students, apprentice-to-degree switchers and full-time workers studying part-time are the ones caught out: earn $80,000 while studying a part-time MBA and you will make compulsory repayments on that $80,000 — while simultaneously adding new debt each census date for the units you're taking. Repaying and borrowing at the same time is completely normal in this system.

The Numbers — Thresholds and Rates That Apply to Students Too

From 1 July 2025 the government moved to a marginal repayment system: you repay a percentage of income above the threshold, not of your whole income. Approximate structure as of the 2025-26 settings:

Worked examples for a studying worker:

Note how gentle the marginal system is just above the threshold — crossing it no longer triggers a repayment on your entire income, which was the old system's nastiest cliff. Exact current thresholds are published on the ATO's study and training support loans page, and you can model your own numbers with our HECS repayment calculator.

Indexation Doesn't Wait for Graduation

Here is the part studying borrowers most often miss: every 1 June, your accumulated HELP debt indexes — now at the lower of CPI or the Wage Price Index following the 2023-24 reform. That includes debt for units you took years ago and debt from last semester (units index once they are more than 11 months old). A student partway through a five-year degree watches earlier years' borrowing compound with indexation before earning a full-time salary. It is not interest in the commercial sense, and it is far cheaper than any bank product, but it is why a $30,000 borrowing can be a $33,000+ balance by graduation. Our HECS at tax time guide covers how these balances flow through your return.

Working While Studying — The Withholding Trap

When you start any job, the TFN declaration asks whether you have a HELP debt. Tick yes and your employer withholds extra tax once your pay rate annualises above the threshold; tick no (or forget) and nothing extra is withheld — then tax time delivers the entire compulsory repayment as a lump-sum bill. Three student-specific wrinkles:

• Casual income spikes: withholding is calculated per pay period. A big fortnight (holiday overtime) can trigger HELP withholding even if your annual income ends up under the threshold — that money isn't lost, it comes back as a refund when you lodge.
• Two jobs: each employer withholds as if theirs is your only income. Two part-time jobs of $35,000 each can individually withhold nothing while your combined $70,000 crosses the threshold — a classic tax-time bill. Our repayment income explainer shows how the combined calculation works.
• Repayments only credit at assessment: the amounts withheld through the year sit with the ATO and reduce your debt only when your return is processed — after 1 June indexation. Timing quirk, not a conspiracy, but worth knowing.

Should You Voluntarily Repay While Studying?

You can make voluntary repayments at any time, and with indexation now capped at the lower of CPI and WPI, the honest maths says most students shouldn't rush. Reasons to hold: the debt carries no real interest above wage growth, repayments are contingent (earn nothing, owe nothing that year), and money in an emergency fund or first-home saver typically does more for a student than shaving a low-cost debt. Reasons a voluntary payment can make sense: you are close to fully clearing a small balance before indexation hits on 1 June, or a family member is gifting the payment anyway. If your balance qualified for the one-off 20% reduction legislated in 2025, check your current balance before making any voluntary payment — many borrowers' figures changed. The full decision framework is in our pay-off-HECS-early analysis, and the calculator lets you compare scenarios with your own numbers.

The Practical Checklist for Studying Workers

• Estimate your repayment income for the year — not just your base pay — and check it against the current threshold.
• Tick the HELP box on every TFN declaration; un-tick nothing just to boost take-home pay.
• Working two jobs? Ask one employer to withhold extra, or set aside approximately 3-5% of the second income yourself.
• Watch your census dates: debt is incurred per unit at census, so dropping a unit before census is the only free exit.
• Check your balance each July on myGov — after indexation and after your assessment credits — so graduation-day surprises don't exist.

This 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.

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