Tax and Income

What Is HECS-HELP Debt?

An Australian government student loan scheme (Higher Education Contribution Scheme / Higher Education Loan Program) that defers tuition fees, repaid via the tax system once income exceeds the repayment threshold.

Definition

HECS-HELP is an Australian government loan scheme that allows eligible students to defer their higher education tuition fees. The debt is indexed annually to CPI and repaid through the tax system once income exceeds the compulsory repayment threshold (approximately $54,000 in 2025/26). Repayment rates increase with income, ranging from 1% to 10% of repayable income. Unlike commercial loans there is no interest charged above CPI indexation. HECS-HELP repayments are collected by the ATO via PAYG withholding if you notify your employer of your debt, or via your annual tax return. The debt does not affect your credit score but reduces your take-home pay.

Example

With a $90,000 income and a HECS-HELP balance, the repayment rate is approximately 7% of total income = $6,300 per year. This is deducted via PAYG withholding or tax return.

Use It

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Related Terms

PAYG WithholdingAustralia's pay-as-you-go tax withholding system. Employers withhold income tax from employees' wages each pay period and remit it to the ATO on the employee's behalf.Low Income Tax Offset (LITO)A non-refundable tax offset for low and middle income earners in Australia that reduces the amount of income tax payable. The maximum LITO for 2025/26 is $700.Medicare LevyA 2% tax on taxable income that funds Australia's public health system (Medicare). Low-income earners may be fully or partially exempt. High earners without private hospital cover pay an additional Medicare Levy Surcharge (MLS) of 1-1.5%.

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