1. The debt is created at enrolment
When you enrol in a Commonwealth Supported Place (CSP) at an Australian university and choose to defer your student contribution, the government pays the university on your behalf and adds the amount to your HELP balance. This happens each semester you defer, so a 3-year degree typically generates around $30,000 – $45,000 of HECS-HELP debt, depending on the course "band" (arts, science, law etc).
2. The balance doesn't accrue interest
Unlike commercial loans, HECS-HELP doesn't charge interest. Instead, your balance is indexed once a year on 1 June to preserve its real value. Since 2024, indexation is capped at the lower of CPI or the Wage Price Index — typically 2–4% per year. See our full indexation explainer.
3. Repayments start when you earn enough
You don't make repayments while you're studying (unless you choose to make voluntary ones). Once your repayment income crosses the threshold — $67,000 for FY2025-26 under the new marginal system — your employer begins withholding from your salary. The first bracket is 15c per dollar over $67,000, then 17c above $125,000, then 10% of whole income above $179,286.
| Repayment income | Repayment calculation |
|---|---|
| $0 – $67,000 | Nil — no compulsory repayment |
| $67,001 – $125,000 | 15c for every $1 over $67,000 |
| $125,001 – $179,285 | $8,700 + 17c for every $1 over $125,000 |
| $179,286 and above | 10% of total repayment income (whole-of-income) |
Big change from 2024-25: The new marginal system means repayment is calculated only on income above $67,000 (except at the top bracket). Under the old system, the rate applied to your entire income. Source: Australian Taxation Office — Repayment thresholds and rates 2025-26; Higher Education Legislation Amendment (20% Reduction of HELP Debts) Act 2025. Repayment income = taxable income + reportable fringe benefits + reportable super + net investment loss + exempt foreign employment income.
4. Repayments happen in two places
Your employer withholds an estimated repayment amount each pay cycle, based on your pay-period income. These amounts go to the ATO as general PAYG withholding, not directly to your HECS account.
At tax time, the ATO calculates your actual compulsory repayment using your annual repayment income and applies it to your HELP balance. If your employer over-withheld, you get a refund. Under-withheld, you owe the difference.
5. You can pay voluntarily any time
Outside the compulsory system, you can make voluntary payments of any amount using BPAY or direct credit with your ATO payment reference. Voluntary payments credit to your balance within 3–5 business days — and if they're processed before 1 June, they reduce that year's indexation charge.
6. The balance disappears when it hits zero
When enough compulsory and voluntary payments have been credited to take the balance below zero, the ATO closes the account. Any overpayment is refunded. From that point, HECS no longer affects your pay, your tax, or your home loan application.
What happens in edge cases
- Multiple jobs — each employer withholds as if theirs is your only income, so total withholding often falls short. Read the multiple-jobs guide.
- Self-employed — no employer withholding; you pay via the ATO quarterly instalment system. Read the self-employed guide.
- Living overseas — Australian citizens and permanent residents still owe HECS and must declare worldwide income. Read the overseas guide.
- Death or permanent disability — the debt is extinguished. Read the forgiveness guide.