In 2026-27 you make no compulsory HECS-HELP repayment if your repayment income is $69,528 or less. Above that, you repay 15 cents for each dollar over $69,528, rising to 17 cents above $129,717, and 10% of your whole repayment income from $186,051. Since 2025-26 the repayment applies only to income above the threshold.

2026-27 compulsory repayment rates (ATO)
Repayment income 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

How do the 2026-27 thresholds compare with 2025-26?

2025-26 compulsory repayment rates (ATO)
Repayment income Repayment
$0 to $67,000 Nil
$67,001 to $125,000 15c for each $1 over $67,000
$125,001 to $179,285 $8,700 plus 17c for each $1 over $125,000
$179,286 and over 10% of your total repayment income

The thresholds rose for 2026-27, so the same income produces a slightly smaller repayment. The rates themselves did not change.

What is the marginal repayment system?

Before 2025-26, once your income passed a threshold, a percentage applied to your whole income, so a small pay rise could add a large repayment. From 2025-26, the repayment is worked out only on the income above the first threshold, in bands, much like income tax. At the top band it returns to 10% of your total repayment income.

How much will I repay? Worked examples for 2026-27

Compulsory repayment at different incomes, 2026-27
Repayment income Working Yearly repayment
$69,528 At or under the threshold $0
$75,000 15% of $5,472 $820.80
$90,000 15% of $20,472 $3,070.80
$140,000 $9,028 plus 17% of $10,283 $10,776.11
$200,000 10% of $200,000 $20,000

What counts as repayment income?

Not just your salary. The ATO adds together:

  • taxable income;
  • total reportable fringe benefits, such as salary packaging over the reporting threshold;
  • total net investment loss, for example from a negatively geared property;
  • reportable super contributions;
  • exempt foreign employment income.

So salary packaging and investment losses do not reduce your HECS-HELP repayment the way they reduce income tax. The article on salary packaging and home loans covers the packaging side.

How is the debt indexed?

On 1 June each year the ATO indexes the part of your debt that has been unpaid for more than 11 months. The rate is the lower of the Consumer Price Index and the Wage Price Index. It was 2.8% on 1 June 2026 and 3.2% on 1 June 2025.

What happened to the 20% reduction?

The Universities Accord (Cutting Student Debt by 20 per cent) legislation reduced study loan balances by 20%, worked out on the balance as at 1 June 2025, before that year’s indexation. The 2025 indexation was then recalculated on the lower amount. If you had a debt at that date, your ATO account should show the reduction.

How are repayments collected?

Your employer withholds extra tax through the pay cycle once your income is above the threshold, and the ATO works out the exact compulsory repayment when you lodge your tax return. Voluntary repayments are allowed at any time and go straight off the balance.

Should you pay HECS-HELP off before buying a home?

Only if you can clear it completely. Lenders count the compulsory repayment, which is worked out from your income, not your balance. A partial voluntary repayment makes the debt smaller but leaves the yearly repayment, and its effect on borrowing power, exactly the same until the debt is gone.

Paying extra off a HECS-HELP debt before a home loan
Option Compulsory repayment Effect on borrowing power
Make no extra payment Unchanged Unchanged
Pay part of the balance Unchanged Unchanged
Pay the whole balance Stops Rises, but the deposit falls by the same amount

Clearing the debt uses money that could otherwise be deposit, so the right answer depends on the numbers. With indexation at 2.8% in 2026 and home loan rates higher than that, many buyers are better off keeping the cash as deposit or in an offset account. The borrowing power calculator and the offset calculator help compare the two.

What if you move overseas?

The debt does not go away. Australians with a study loan who move overseas must keep their contact details up to date with the ATO and report their worldwide income, and repayments apply on income above the threshold.

Does a HECS-HELP debt affect a home loan?

Yes, through the compulsory repayment rather than the balance. Lenders treat the repayment as a cost that reduces the income available for the loan. The HECS-HELP debt and home loans page explains how lenders assess it and when paying it off before applying helps, and the worked example of a 5% deposit buyer with HECS shows the effect on one application.

Questions people ask

What is the HECS repayment threshold for 2026-27?

$69,528. Below that you make no compulsory repayment. Above it you repay 15 cents per dollar over $69,528, rising at higher incomes.

What was the HECS indexation rate in 2026?

2.8%, applied on 1 June 2026, the lower of CPI and wage growth.

Is HECS repaid on my whole income?

Not since 2025-26, except at the top band. The repayment is worked out on income above the threshold, and at $186,051 or more it is 10% of your total repayment income.

Charles Touma works out how your HECS-HELP repayment affects borrowing power and whether clearing part of the debt before you apply is worth it. A free 30-minute call covers your income and the lenders that treat it best. General information only, not tax or credit advice. Sources: ATO, study and training loan minimum repayment income and rates (updated 13 October 2026) and indexation rates; Department of Education, 20% reduction of student loan debt, checked 17 October 2026. Example repayments are calculated from the ATO’s 2026-27 table.

General information only, not credit, legal or tax advice. Your situation is assessed properly before any recommendation. Government scheme details change; figures are current at the time of writing.