HECS-HELP and Australian tax: everything you need to know

College student using laptop

Do you have a student loan? Are you worried that you might never pay it off? You’re not alone – this year, with loans due to be indexed at an eye-watering 4.1%, many ex-students might find that the amount they pay off is less than the amount added in indexation!

So, how exactly are the amounts of repayments calculated?

Compulsory loan repayments are made through the tax system when your income reaches a certain threshold (currently $51,550 for the 2023-24 financial year). However, it is possible to also make voluntary repayments at any time regardless of income.

When your income exceeds this threshold, a compulsory repayment of at least 1% of your income is raised in your income tax assessment. The percentage increases as your income increases.

Rates for 2023-24 are as follows:

Repayment IncomeRepayment % rate
Below $51,550Nil
$51,550 – $59,5181.00%
$59,519 – $63,0892.00%
$63,090 – $66,8752.50%
$66,876 – $70,8883.00%
$70,889 – $75,1403.50%
$75,141 – $79,6494.00%
$79,650 – $84,4294.50%
$84,430 – $89,4945.00%
$89,495 – $94,8655.50%
$94,866 – $100,5576.00%
$100,558 – $106,5906.50%
$106,591 – $112,9857.00%
$112,986 – $119,7647.50%
$119,765 – $126,9508.00%
$126,951 – $134,5688.50%
$134,569 – $142,6429.00%
$142,643 – $151,2009.50%
$151,201 and above10.00%

What is HELP Repayment Income (HRI)?

Your repayment income is different to your taxable income. It is calculated as:

your taxable income for an income year, plus

your total net investment losses, plus

any total reportable fringe benefit amounts shown on your PAYG payment summary; plus

reportable super contributions; and

any exempt foreign employment income from the current income year

Is there interest charged on my student loan?

Not as such. However, on 1 June each year, indexation is applied to any part of your student loan that has remained unpaid for more than 11 months. Indexation maintains the real value of the loan by adjusting it in line with inflation. Student loans in 2024 are scheduled to be indexed by 4.1%.

How to repay your HECS-HELP debt though the taxation system

Compulsory repayments

Your compulsory repayments (from the table above) will be taken out by your employer automatically in additional tax from each pay to cover your estimated HECS-HELP debt liability. The additional tax withheld by your employer should cover this repayment.

Note: Your employer only withholds the additional tax based on the income THEY pay to you. They won’t take into account other income – from second or previous jobs or investment for instance – so you may have to make a top-up payment once you lodge your tax return.

Voluntary repayments

You are able to make voluntary repayments to your debt at any time to the ATO by BPAY and credit card. It’s recommended that if you can afford it, that you make voluntary repayments before 1 June so that only the lower balance is indexed.

Tax tips for repaying your HELP debt

Keeping receipts and claiming deductions for everything you’re entitled to can reduce your HRI and minimise your compulsory annual repayment amount. It is important to keep all work related receipts and to take advice on what you can claim in order to maximise your refund.

If you are working more than one job, each employer will only withhold additional tax to cover your HECS-HELP debt based on the income that they pay you. If your combined income from multiple employers is over the minimum repayment threshold, you will still be liable to make a repayment towards your HECS-HELP debt when you lodge your tax return.

This content has been provided by H&R Block’s Director of Tax Communications, Mark Chapman.