HELP/HECS Debt Repayments

What is HELP/HECS?

The Higher Education Loan Program (HELP), often referred to by its former name HECS, is a government scheme that provides financial assistance to students to cover the costs of their tertiary education. The loan doesn't need to be repaid until your income reaches a certain level, which you can check with our comprehensive tax calculator.

When Do Repayments Start?

You are required to start making compulsory repayments towards your HELP debt once your 'repayment income' is above the minimum repayment threshold for an income year. This threshold changes each year.

Your repayment income is calculated as:

Taxable Income + Total Net Investment Losses + Reportable Fringe Benefits + Reportable Super Contributions + Exempt Foreign Employment Income

This is a broader measure than just your salary, and it's also used to determine eligibility for other obligations like the Medicare Levy Surcharge.

How Are Repayments Calculated?

The amount you repay is calculated as a percentage of your repayment income. This percentage increases as your income grows, meaning the more you earn, the higher your repayment rate and the faster you pay off your debt.

These repayments are compulsory and are collected by the ATO through the tax system, similar to how income tax is withheld. Your employer will use the information you provide in your Tax File Number declaration form to withhold additional amounts from your pay to cover your estimated HELP liability. If your repayments result in a large tax refund, you may be eligible for a PAYG Withholding Variation.

Loan Indexation

It's important to know that your outstanding loan balance is indexed each year on 1 June to maintain its real value by adjusting it in line with changes in the cost of living (based on the Consumer Price Index - CPI). This is not the same as a commercial interest rate, but it does mean your debt will grow over time if you are not making repayments.