HECS-HELP Repayment Thresholds 2025-26: How the New System Works

How HECS Repayments Work Now

If you've heard horror stories about someone getting a small pay rise and suddenly owing thousands more in HECS repayments, that was the old system. It's gone.

From 1 July 2025, Australia switched to a marginal repayment system. It works like tax brackets. You only pay the higher rate on the income within each bracket, not your entire income. No more "repayment cliffs" where a $1 pay rise costs you hundreds.

The minimum repayment threshold also jumped from $54,435 to $67,000. If you earn under that, you don't repay anything.

The 2025-26 Repayment Rates

Here's the full breakdown:

Your "repayment income" isn't just your salary. The ATO adds up your taxable income, reportable fringe benefits, total net investment losses, and reportable super contributions. Keep that in mind.

What This Actually Looks Like

Let's make it real with some examples.

Earning $70,000: You're $3,000 over the $67,000 threshold. You pay 15c per dollar on that $3,000 = $450 per year. That's about $37 per month.

Earning $85,000: You're $18,000 over the threshold. 15c x $18,000 = $2,700 per year. About $225 per month.

Earning $100,000: $33,000 over the threshold. 15c x $33,000 = $4,950 per year. About $413 per month.

Earning $150,000: First bracket: 15c x $58,000 = $8,700. Second bracket: 17c x $25,000 = $4,250. Total = $12,950 per year.

The Part Nobody Talks About

A $67,000 threshold sounds like great news. And in the short term, it is — more money stays in your pocket while you're getting started in your career.

But here's the catch: while you're earning under $67,000, you're not repaying a cent, and your debt is still being indexed every single year.

Let's say you graduate with a $40,000 HECS debt and spend three years earning $55,000-$65,000 while you build your career. At 3% indexation per year, your debt grows to roughly $43,700 before you've made a single repayment. That's almost $4,000 added to your balance just from indexation during those years below the threshold.

Now scale that up. A $50,000 debt? After three years of indexation at 3%, you're looking at closer to $54,700. Your degree just got nearly $5,000 more expensive, and you haven't missed a payment — the system simply wasn't asking you to make one.

The higher threshold protects you from financial strain early in your career, which is genuinely helpful. But it also means your debt has more time to grow before you start chipping away at it. Being aware of this doesn't mean you need to panic. It means you can plan for it.

Want to see exactly how long it'll take to pay off your HECS debt based on your expected income? Use the HELP Loan Calculator → — model different starting salaries and see how the threshold affects your total repayment.

Where This Info Comes From

All repayment rates in this guide are sourced from the Australian Taxation Office for the 2025-26 income year. Indexation rates are published by the ATO here.

This guide is for educational purposes only and is not financial advice. Always verify figures with the ATO.