How to repay your HECS debt

Paying back your HECS debt doesn’t need to feel like a minefield! Our guide will help you navigate paying back your HECS debt with ease.  

Graduating from uni and scoring your first industry job can be an exciting time. Between a regular income, team perks and trying to keep up with your new workload, the thought of repaying loans can easily slip down the list of priorities. However, as you start your new career, it’s wise to consider your HECS repayment goals. 

How to check HECS debt

A HECS or HECS-HELP is a low-interest loan from the Australian government. Your tuition fees are paid directly to your institution by the government. Once you graduate and earn a certain amount of money, you need to start paying back what you’ve borrowed.

Before you start settling your HECS debt, it’s wise to know exactly where you stand and how much you need to pay. First things first, use the Australian Government website to find out more about your HECS repayment threshold; this is the amount you will need to earn before payments are deducted automatically by the government, and is scaled depending on your salary. After you’ve found your repayment band, set up a MyGov account (if you don’t already have one) to easily stay on top of your HECS debt online through the Australian Taxation Office.

When do you start paying your HECS debt?

At the time of publication, you won’t need to start paying back your HECS debt until you start earning over $47,014 a year. As we mentioned above, HECS payment rates on how much you make before tax - higher salaries attract higher repayments! You can find your HECS rate for the 2021 - 2022 financial year below:

 2021-2022 Repayment Threshold  HECS repayment rates 
 $47,014 - $54,282  1.0%
 $54,283 - $57,538  2.0%
 $57,539 - $60,991  2.5%
 $60,992 - $64,651  3.0%
 $64,652 - $68,529 3.5% 
 $68,530 - $72,641 4.0% 
 $72,642 - $77,001 4.5% 
 $77,002 - $81,620 5.0% 
 $81,621 - $86,518  5.5%
 $86,519 - $91,709  6.0%
 $91,710 - $97,212  6.5%
 $97,213 - $103,045  7.0%
 $103,046 - $109,227  7.5%
 $109,228 - $115,781  8.0%
 $115,782 - $122,728  8.5%
 $122,729 - $130,092  9.0%
 $130,093 - $137,897  9.5%
 Over $137,898  10.0%

It’s best to check the Australian Taxation website for up to date information as the HECS debt repayment threshold can change every year. You can also use a HECS repayment calculator through the Australian Taxation Office to view your exact HECS threshold amount. 

What is the HECS repayment income threshold?

When you start paying off your HECS, you might hear the phrase HECS repayment income quite a lot. Keep in mind that your HECS repayment income (HRI) is different from your taxable income. It takes into consideration: 

  • Your total income for the financial year
  • Your total net investment losses
  • Any fringe benefits 
  • Super contributions
  • Any exempt foreign employment income in the past financial year

Does my HECS debt accrue interest?

Interest isn't charged on HECS loans. While there is no HECS debt interest, your debt will be adjusted on 1 June every year to account for inflation. 

How to pay off HECS debt 

There are two ways to pay off your HECS debt. While many people pay back their HECS through their employer (we’ll explain more on this in ‘compulsory repayments’ below), some may consider paying it off faster with voluntary HECS debt repayments. 

Compulsory repayments

These are made through your employer. When you start earning over the HECs threshold, your employer will withhold the required payment amount from your wage before you are paid. Then, the ATO will use that to pay back your loan. 

Think of this as a set and forget option. Just make sure  you indicate to your employer that you have a HECS debt on the Tax Declaration Form when you commence employment.

If you are self-employed, you will have to make payments when you lodge your tax return. 

Voluntary repayments

You can also pay off your student loans faster with voluntary repayments. You can make a direct payment to the ATO by BPAY and credit card. 

Why is my HECS debt not going down?

If you find that your repayments are being taken from your pay, but your HECS balance doesn’t seem to be moving online, it’s wise to investigate a little further. First, speak with your employer to make sure that repayments are in fact being taken from your pay. If that is the case, then you should get in contact with the ATO. There may be an issue with your payments or you may not be paying the right amount. 

By understanding when you need to start repayments and how much you are expected to pay back, you can be informed when it comes to paying off your HECS debt. Whether you’re considering making voluntary repayments as well as compulsory contributions, or you’re keen to let the debt tick away through your employer, there are options to suit your financial goals.

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