Australia HECS-HELP Repayment Calculator (2025-26 Marginal System)

Worked example

Scenario: Priya has a HECS-HELP debt and expects repayment income of $90,000 in the 2025-26 year (her $86,000 salary plus a $4,000 net rental loss added back).

Step 1 - Find the bracket
$90,000 sits in the first repayment bracket ($67,001 to $125,000), so she repays 15 cents for each dollar above the $67,000 threshold.

Step 2 - Income above the threshold
$90,000 - $67,000 = $23,000

Step 3 - Compulsory repayment
15% x $23,000 = $3,450

Step 4 - Effective repayment rate
$3,450 / $90,000 = 3.83% of her income, even though the marginal rate on the top slice is 15%.

Why the new system matters: under the old whole-of-income method someone on $90,000 paid a flat rate on every dollar (around 7%, roughly $6,300). Under the marginal system Priya pays only $3,450, because the first $67,000 is completely free of repayment.

Higher earners: On $140,000 the calculation uses the second bracket: $8,700 + 17% x ($140,000 - $125,000) = $8,700 + $2,550 = $11,250 (effective 8.04%). On $200,000, which is above the $179,286 top threshold, the flat rule applies: 10% x $200,000 = $20,000 (effective 10%).

How the new marginal HECS-HELP repayment system works

From 1 July 2025 the way compulsory study loan repayments are calculated changed completely. Under the old system, once your income crossed a repayment threshold you paid a single flat percentage on your entire income. Earn one dollar over a threshold and the higher rate applied to every dollar you earned, which created harsh cliffs where a small pay rise could trigger a much larger repayment.

The new marginal repayment system works much more like income tax. There is a tax-free style threshold ($67,000 in 2025-26), and you only make a compulsory repayment on the part of your income above that threshold. The first $67,000 is always free of repayment, no matter how much you earn in the lower and middle brackets. This means a marginal rate of 15 cents in the dollar on the slice above the threshold produces a much lower effective rate on your total income.

The system applies to the full family of study and training support loans, which all share one combined balance for repayment purposes: HECS-HELP, FEE-HELP, VET Student Loans, the Student Financial Supplement Scheme (SFSS), Student Start-up Loans (SSL) and ABSTUDY SSL. You do not choose to make these compulsory repayments; the ATO works them out when you lodge your tax return and offsets the tax your employer has already withheld against them.

This calculator applies the confirmed 2025-26 and 2026-27 marginal brackets to the repayment income you enter and shows both the dollar repayment and the effective rate. It estimates the compulsory repayment only. It does not include any voluntary repayments you choose to make, and it does not model the annual indexation of your loan balance.

What counts as repayment income (it is not just your salary)

The single most common mistake is to enter your salary and assume that is what your repayment is based on. It is not. Compulsory repayments are calculated on your repayment income, which is deliberately broader than both your salary and your taxable income.

Repayment income is made up of your taxable income, plus several amounts added back: your reportable fringe benefits (for example a novated car lease shown on your income statement), your reportable super contributions (extra super you salary sacrifice above the compulsory rate), your net investment losses (most commonly a negatively geared rental property or share portfolio that runs at a loss), and any exempt foreign employment income.

The reason these are added back is to stop people from lowering their repayments through arrangements that reduce taxable income without reducing their real capacity to pay. So salary sacrificing into super or negatively gearing a property will cut your income tax, but it will not cut your HECS repayment, because those amounts are added straight back into repayment income. When you use this calculator, enter your expected full-year repayment income including these add-backs, not just your gross wage, or you will understate your repayment.

The 2025-26 and 2026-27 thresholds and rates

The thresholds and bracket boundaries are indexed each year to average weekly earnings, so they rise over time. Here are the confirmed figures for the two current years.

2025-26 income year

• Up to $67,000: nil.
• $67,001 to $125,000: 15 cents for each $1 over $67,000.
• $125,001 to $179,285: $8,700 plus 17 cents for each $1 over $125,000.
• $179,286 and over: a flat 10% of your whole repayment income.

2026-27 income year

• Up to $69,528: nil.
• $69,529 to $129,717: 15 cents for each $1 over $69,528.
• $129,718 to $186,050: $9,028 plus 17 cents for each $1 over $129,717.
• $186,051 and over: a flat 10% of your whole repayment income.

Note the design of the top bracket. In the first two brackets you pay only on the income above the threshold, so the effective rate stays well below the headline marginal rate. But once your repayment income reaches the top threshold, the rule flips back to a flat 10% of your entire repayment income. The bracket boundaries are set so this switch is smooth: at the top threshold the marginal calculation and the flat 10% calculation produce almost exactly the same figure, so nobody jumps sharply.

The 20% debt cut, indexation and voluntary repayments

Alongside the move to marginal repayments, the government applied a one-off 20% reduction to study and training loan balances. That reduction was calculated on the balance you held as at 1 June 2025, before the usual annual indexation was applied on that date. If you had a $30,000 HECS debt, roughly $6,000 was wiped, subject to the exact timing of your indexation. You did not need to apply for it; the ATO applied it automatically.

Separately from repayments, your outstanding balance is still indexed on 1 June each year. Since 2023-24 indexation is capped at the lower of the Consumer Price Index or the Wage Price Index, which protects borrowers in years when inflation spikes. Indexation is not interest and it is applied to the balance, not to your income, so it does not appear in this repayment calculator, which deals only with the compulsory repayment worked out on your return.

You can also make voluntary repayments at any time to clear the debt faster. Because indexation is applied on 1 June, a voluntary payment made shortly before that date reduces the balance that gets indexed. Voluntary repayments are on top of, and separate from, the compulsory repayment this tool estimates. If you are close to paying the loan off, it is worth checking your balance before making a large voluntary payment, so you do not overpay and have to claim a refund.

Finally, remember this is a planning estimate. Your actual compulsory repayment is set when you lodge your return, using your final repayment income for the year. If your income is variable, or you have reportable fringe benefits or investment losses that change, re-run the numbers once you have firmer figures.

Frequently asked questions