HECS/HELP Repayment Guide 2026-27: New Threshold and Marginal Rates Explained

 

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Last updated: July 2026  |  Reading time: 10 min

When I graduated and started my first full-time job, I ticked "yes" to the HECS debt question on my tax declaration form without really understanding what would happen next. Money started disappearing from my payslip each fortnight under a line called "STSL withholding" and I had only a vague idea of where it was going or when the debt would actually be paid off.

If that sounds familiar, this guide covers everything — how HECS repayments actually work, what changed from July 1 2026, and how to work out exactly what you'll repay this financial year.

HECS vs HELP — What's the Difference?

HECS (Higher Education Contribution Scheme) is the old name. Since 2005, it's officially been called HECS-HELP — part of the broader Higher Education Loan Program (HELP). Most people still call it "HECS" out of habit, and the ATO uses "HELP debt" in its official materials. They refer to the same thing: a government loan that covers your university student contribution, repaid through the tax system once your income crosses a threshold.

The Big Change for 2026-27: Marginal Repayment System

From the 2025-26 financial year onwards, the ATO switched to a marginal repayment system for HECS/HELP — and it makes a real difference for most people.

Old system (before 2025-26): Once your income crossed the threshold, a repayment percentage applied to your entire income. Cross the line by $1 and suddenly you owed a percentage of everything you earned.

New system (from 2025-26, including 2026-27): You only repay on the income above the threshold — exactly like income tax brackets work. Cross by $1 and you owe repayments on that $1 only, not on your whole income.

What this means in practice: For most people earning between $69,528 and $100,000, the new marginal system means a lower compulsory repayment than the old flat-rate system. The closer you were to the threshold under the old system, the more you benefit from the change.

2026-27 Repayment Thresholds and Rates

The minimum repayment threshold for 2026-27 is $69,528 — up from $67,000 in 2025-26. If your repayment income is below this, no compulsory repayment applies.

Repayment incomeRepayment rate
Up to $69,528Nil — no repayment required
$69,529 – $129,71715 cents per $1 over $69,528
$129,718 – $186,050$9,028 plus 17 cents per $1 over $129,717
$186,051 and above10% of total repayment income (cap)
Repayment income ≠ taxable income. The ATO adds several things on top of your taxable income to calculate your "repayment income": reportable fringe benefits, reportable super contributions (like salary sacrifice), net investment losses, and exempt foreign employment income. If you salary sacrifice, this can push your repayment income higher than your take-home pay would suggest.

🎓 HECS/HELP Repayment Calculator — 2026-27

Estimate your compulsory repayment and how long until your debt is paid off.

$85,000
$35,000

Annual repayment

$2,321

compulsory this year

Per payslip (fortnightly)

~$89

approx. withholding

Repayment rate

15c per $1

above threshold

Est. years to pay off

~13 years

at current income

% of debt repaid/yr

6.6%

Annual repayment as % of total debt

Based on ATO 2026-27 marginal repayment rates. Threshold: $69,528. Does not account for annual indexation (2.8% applied June 2026) or income changes over time. Estimate only.

How Repayments Actually Work Day to Day

The process is mostly automatic, but there are a few things worth understanding.

Telling your employer

When you start a job, you fill out a Tax File Number Declaration form. One of the questions is whether you have a HELP, HECS, or other study and training loan. If you tick "yes," your employer withholds extra tax from each payslip throughout the year to cover your estimated repayment. If you forget to tick it — or change jobs and forget to update your new employer — you'll end up with a bill at tax time when the ATO calculates what you actually owe.

What shows up on your payslip

Look for a line called "STSL withholding" or "Study loan repayment." That's the extra amount being set aside each pay cycle. It's an estimate based on your annualised income — if you work extra hours in one fortnight, your employer calculates as if you earn that amount all year and withholds accordingly. This can result in slight over or under-withheld amounts across the year, which the ATO reconciles when you lodge your tax return.

At tax time

When you lodge your tax return, the ATO calculates your actual repayment income for the year, works out your compulsory repayment, and compares it to what your employer withheld. If your employer withheld too little, you'll have a gap to pay. If they withheld too much (common if your income was below the threshold for part of the year), you get that excess back as part of your refund.

Multiple jobs: If you work two jobs, each employer only withholds based on what they pay you — not your combined income. If your combined income pushes you above the repayment threshold but neither job alone does, you'll get a bill at tax time. Ask your main employer to withhold extra, or make a voluntary repayment during the year to avoid a surprise.

The 20% Debt Reduction — What Actually Happened

In 2025, the Australian Government legislated a one-off 20% reduction to all eligible HELP, HECS, and other study loan balances. This was processed before the June 2025 indexation date, meaning the reduction applied first and then indexation (3.2% in 2025) was applied to the already-reduced balance. If you had an outstanding debt on 1 June 2025, your balance was reduced by 20% before indexation.

For the 2026 indexation date (1 June 2026), the rate applied was 2.8% — lower than recent years, reflecting a drop in the consumer price index. This 2.8% is added to your outstanding balance each June 1.

Check your balance: Log into myGov → ATO → "Manage study and training support loans" to see your current balance. If you haven't checked since the 20% reduction was processed, your balance may be lower than you expect.

Voluntary Repayments — Are They Worth It?

You can make voluntary repayments to your HECS debt at any time through myGov — via BPAY or credit card. There's no bonus or discount for doing so (the government removed the 5% voluntary repayment bonus years ago), but there are still reasons to consider it:

  • Reduces the amount subject to annual indexation — the less debt you have on June 1, the less indexation adds to it
  • Peace of mind — particularly if you're planning to travel or work overseas, where HELP obligations still apply based on worldwide income
  • Doesn't reduce your take-home pay automatically — unlike compulsory repayments, voluntary ones come out of your savings on your own terms

Voluntary repayments are generally not tax-deductible for individuals. They don't reduce your compulsory repayment for that year either — the ATO calculates your annual obligation based on income, regardless of what you've voluntarily paid.

HECS and Working Overseas

A common misconception: if you leave Australia, your HECS debt disappears or pauses. It doesn't. If you're an Australian living and working overseas, you're still required to report your worldwide income to the ATO and make compulsory repayments if your income exceeds the threshold — whether or not you're earning Australian-sourced income.

From 2017, the ATO tightened overseas compliance, and has continued to increase its focus on Australians working abroad with outstanding HELP debts. If you're planning an extended overseas move, notify the ATO through your myGov account and make sure you understand your reporting obligations.

Common Questions

How do I find out my HECS balance? ▼
Log into myGov → link to ATO if you haven't already → select "Manage study and training support loans." Your current balance, including any indexation applied, will be displayed. You can also call the ATO on 13 28 61 and they'll confirm your balance after verifying your identity.
Does salary sacrifice affect my HECS repayments? ▼
Yes — reportable employer super contributions (like salary sacrifice into super) are added back to your taxable income to calculate your "repayment income." So if you salary sacrifice $10,000 into super, that $10,000 is added back when the ATO calculates your HECS repayment, even though it reduced your take-home pay and taxable income. This can push some people above the repayment threshold who otherwise wouldn't be there.
What happens to my HECS debt if I die? ▼
The remaining HELP debt is cancelled upon death. The executor of the estate lodges outstanding tax returns up to the date of death, and the ATO calculates any compulsory repayment for that final year. Whatever debt remains after that is written off — it doesn't pass to a spouse or estate.
Can I claim a deduction for my HECS repayments? ▼
No. Compulsory HECS/HELP repayments are not tax-deductible. Voluntary repayments made by you personally are also not deductible. Note that this is different from self-education expenses — if you're studying something directly related to your current job, course fees, textbooks, and other costs may be claimable as work-related deductions, but that's separate from the HECS debt repayment itself.
I earned under the threshold this year — do I still need to lodge a tax return? ▼
If your employer was withholding STSL amounts from your pay throughout the year but your final income ended up below $69,528, yes — you should lodge a return. The ATO will calculate that no repayment is owed and refund the amounts that were withheld. Not lodging means that money stays with the ATO rather than coming back to you.
Disclaimer: This article is general information only and does not constitute financial or tax advice. HECS/HELP thresholds, indexation rates, and repayment rules change annually. Always refer to ato.gov.au for current rates or consult a registered tax agent for advice specific to your situation.

Sources: ATO (ato.gov.au), Services Australia (servicesaustralia.gov.au)

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