How to Handle HECS / HELP: A Complete Guide to Student Debt for Australians

Are you one of the millions of Australian students with HECS / HELP debt? Are you still unsure of how it all works and when you have to start paying your student loan back? The quick but comprehensive report below will set you in the right direction.


HECS / HELP is a low-interest loan from the Commonwealth government. If you receive a HECS or HELP loan, the government will pay your student fees directly to your educational institution on your behalf. You generally won’t be required to make payments on your student loan until you start earning above a certain income. Once your income exceeds that threshold, you will make compulsory payments through the tax system. When you file your tax return each year, you’ll find that the more you earn, the more you need to pay back. If you want to get ahead, you can make voluntary repayments at any time.

Pro Tax Tip: A HECS / HELP loan will cover your tuition fees only. It does not cover costs such as accommodation, laptops, or textbooks.

Who Can Apply for a HECS or HELP Loan?

You should be eligible to apply for a HECS / HELP loan if you:

  • Study at a Commonwealth-supported institute;
  • Are an Australian citizen who meets residency requirements;
  • Are a New Zealand Special Category Visa (SCV) holder or permanent humanitarian visa holder and meet residency requirements;
  • Submit the Request for Commonwealth Support and HECS / HELP form to your provider by the census date;
  • Enrol in each unit at your educational provider by the census date;
  • Have an available HELP balance.

Pro Tax Tip: The census date is the last date on which you can withdraw from a subject. Your tertiary education provider will finalise enrolments on this date, and any HECS / HELP debt you accrue will stick, even if you later withdraw from the course. So, it’s worth setting up a notification to alert you just prior to each semester’s census date. That way, if you want to make changes to your enrollment, you’ll have time to do so without incurring unnecessary debt.


How Do HECS / HELP Loans Work?

HECS / HELP loans don’t accrue interest the way loans from banks or other financial institutions do. They don’t have a deadline by which you must pay the amount back, and you only need to make repayments once you’re earning a certain amount per annum. These factors have earned Australian student loans a “good debt” title. However, it’s crucial to understand that your outstanding balance will be indexed to remain in line with the cost of living. 

During inflationary periods, indexation can add considerably to the amount you owe. For example, in 2021, the indexation rate was only 0.6%. However, by 2023, it had climbed to 3.9%, adding thousands of dollars onto many Australians’ HECS and HELP debts.

How Do You Pay Your Student Loan Back?

The threshold levels change each year, and you can find the updates on the ATO website.

Your repayment rate is calculated based on how much you earn. For the current 2022-23 period, the repayment income thresholds and rates are:

Repayment income (RI)Repayment rate
Below $48,361Nil
$48,361 – $55,8361.00%
$55,837 – $59,1862.00%
$59,187 – $62,7382.50%
$62,739 – $66,5023.00%
$66,503 – $70,4923.50%
$70,493 – $74,7224.00%
$74,723 – $79,2064.50%
$79,207 – $83,9585.00%
$83,959 – $88,9965.50%
$88,997 – $94,3366.00%
$94,337 – $99,9966.50%
$99,997 – $105,9967.00%
$105,997 – $112,3557.50%
$112,356 – $119,0978.00%
$119,098 – $126,2438.50%
$126,244 – $133,8189.00%
$133,819 – $141,8479.50%
$141,848 and above10%

If you’re self-employed and earning over the repayment threshold, you’ll make payments on your HECS or HELP loan when you lodge your tax return.

If you have an employer, you’ll need to let them know about your loan in writing. They’ll then be able to withhold the required payment from your wage and direct it to the ATO. When you lodge your tax return, the ATO will calculate your compulsory repayment based on your income for the year.

You’ll need to complete a new Tax File Number (TFN) declaration form each time you start a new job. If you work two jobs, each employer will only need to withhold your HECS / HELP debt on the amount they pay to you. Note that if your combined income exceeds the minimum threshold or pushes you into a higher category, you might have to pay more toward your student loan come tax time.

Pro Tax Tip: If you cross the minimum threshold while studying, you’ll still be required to start paying back your loan.

Making Voluntary HECS / HELP Repayments

You can pay off your student loans faster by making voluntary payments to the ATO using BPAY or a credit card. An ITP Accounting Professional can help establish your voluntary student loan repayments. More importantly, an accountant can help you determine whether this is the best avenue to take. Everyone’s circumstances and financial goals are different, so what works for one person may not be ideal for another.

Pro Tax Tip: Your HECS / HELP debt may affect how much you can borrow if saving for a house. When you apply for a home loan, your lending provider will look at your gross income, expenses, liabilities, and debts. That last category includes HECS and HELP loans.

HECS Repayment Income

Your HECS / HELP Repayable Income (RI) is different from your taxable income. Your RI includes:

  • Your taxable income (not including any assessable First Home Super Saver (FHSS) amounts;
  • Reportable fringe benefits;
  • Total net investment loss (including net rental losses);
  • Reportable super contributions;
  • Exempt foreign employment income amounts.

Pro Tax Tip: If you go bankrupt, your HECS / HELP debt does not disappear. It is reinstated once you start earning the minimum threshold amount.

Death is the only thing that nullifies HECS / HELP debt. If you still have an outstanding balance at this time, it won’t be passed on to anyone. However, if you owed any loan repayments from prior fiscal years, a trustee or executor of your estate will likely be required to cover them.

How to Handle Your Taxes When You Have HECS / HELP Debt

A good accountant can help you minimise your payable HECS / HELP by claiming all of your eligible tax deductions and reducing your Repayment Income. Be diligent about record-keeping, and store digital copies of all relevant receipts and financial information. This is crucial in ensuring you can claim all the tax deductions you’re entitled to.

Make sure the deductions you claim are strictly work-related and that you’re out of pocket for your expenses. An ITP Accounting Professional will walk you through everything you need to know about your HECS / HELP debt. Our experienced tax agents will also ensure you pay the right amount of tax and help you claim all relevant tax deductions and offsets. Phone 1800 367 487 and chat with a Professional today.