A Guide to HECS-HELP
What do you need to know about HECS-HELP?
The Higher Education Loan Program (HELP, formerly known as HECS) is an Australian government scheme that helps students finance their higher education. The scheme operates on an income-contingent repayment model, where graduates repay a percentage of their income once they reach a certain income threshold. This innovative approach has significantly expanded opportunities for Australian students.
How does HECS-HELP work?
Study now, pay later: Students can defer their tertiary education fees through the Higher Education Loan Program (HECS-HELP). The loan amount is calculated based on the specific course and the number of subjects undertaken. The government directly remits the tuition fees to the student's educational institution.
Students do not need to start repaying their HECS-HELP debt until they start earning over the annual income threshold. Repayments for the loan are administered via tax withheld by your employer and/or your annual tax return.
To be eligible for HECS-HELP you must meet the below requirements
- Be studying in a Commonwealth Supported Place (CSP)
- Meet the citizenship and residency requirements
- Submit a valid Request for Commonwealth Support form to your provider by the census date
- Have the required available HELP balance to cover the loan required for study
- Have sufficient Student Learning Entitlement available, i.e. the maximum allowed time you can take to study in a Commonwealth Supported Place
- Be assessed as a genuine student and academically suitable for your unit(s) of study
- Not undertake more than two years' worth of higher education study in 12 months unless your provider has approved you to take on more.
Indexation of HECS-HELP loans
Your HECS-HELP debt will increase over time due to indexation. This is similar to interest, and it's applied annually, on 1 June, to the portion of your debt older than 11 months.
Indexation adjusts your debt to account for rising living costs, ensuring the value of your education remains consistent over time. The indexation rate varies each year.
In November 2024, the Albanese Government passed legislation to reduce the interest rate on student loans. This change will benefit approximately 3 million Australians with a combined debt of $3 billion.
The new law caps the indexation rate to the lower of the Consumer Price Index (CPI) or the Wage Price Index (WPI), ensuring it doesn't exceed wage growth. This change came into effect from 1 June 2023.
This will result in significant savings for borrowers, with an average reduction of around $1,200 per person. The Australian Tax Office (ATO) will automatically apply these changes to all eligible borrowers.
If you had a HELP debt on either 1 June 2023 or 1 June 2024, you'll benefit from the new indexation rate.
- For 2023: If you had a HELP debt on 1 June 2023, you'll receive a credit to offset the higher indexation rate.
- For 2024: Similarly, if you had a HELP debt on 1 June 2024, you'll receive a credit.
- For both years: If you had a HELP debt on both dates, you'll receive credits for both 2023 and 2024.
Can I make extra or early payments on my HECS-HELP?
Yes, extra or early payments can be made at any time during the year. It is recommended that these extra payments be made prior to the indexation point of 1 June each year. This will reduce the current balance before the indexation applies.
What is my compulsory repayment on my HECS-HELP loan?
HECS-HELP debt repayments commence when your annual Repayment Income (RI) surpasses the minimum repayment threshold. This threshold is adjusted annually.
Your repayment income is calculated using the following amounts from your tax return:
- Taxable income, i.e. total income less deductions, not including any assessable First Home Super Saver released amounts
- Any reportable fringe benefits
- Total net investment loss, including rental losses
- Any reportable super contributions
- Any exempt foreign income amounts
The current repayment threshold and rates are as follows:
| 2024-2025 Repayment threshold | Repayment % rate |
| 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% |
Do I have to pay HECS-HELP if I’m living overseas?
Even if you're living and working overseas, you may still be required to make HECS-HELP repayments. This applies to both Australian tax residents and non-residents. It's essential to understand your specific circumstances and consult with the ATO for accurate information on your repayment obligations.
Where can I get the details about my HECS-HELP debt?
To get specific details about your HECS-HELP debt, you can contact us for the information or refer to the ATO, either via MyGov here or by calling the ATO on 13 28 61.
Please note: your HECS-HELP loan account will not show the repayments withheld by your employer throughout the year until you lodge your tax return for the relevant tax year.
The repayment amount for the year is calculated and shown on your annual tax return. If your employer has not withheld enough for your HECS-HELP repayment for the year, you may end up with a tax bill.
Please make sure you inform all employers via your Tax File Number Declaration Form that you have a HECS-HELP debt when you start employment.
If you have paid your HECS-HELP debt off throughout the year, but your employer has continued to withhold extra tax for HECS-HELP repayments, then the credit will be applied to your annual tax return. This may result in a refund depending on your overall income and tax position.
Disclaimer
This is not advice. Items herein are general comments only and do not constitute or convey advice per se. The information contained in these articles is for guidance only and should not be relied upon without obtaining professional advice having regard to your direct circumstances.
