How does HECS-HELP work?

You don't have to save your pennies because HECS is here to HELP.

Thanks to HECS-HELP, students don’t need to save their pennies to afford a university degree.

What is HECS-HELP?

HECS-HELP is a loan system which means that university students don’t have to pay upfront tuition fees (i.e. HECS fees) – government picks up the tab for you. There’s just one hitch: you have to pay the government back… but not until you get a job and the dollars start rolling in. Once that happens, the government deducts repayments from you salary each year.

(For more info on HECS fees, read HECS Fees Explained.)

Who is eligible for HECS-HELP?

All domestic undergraduate students can get a HECS-HELP loan. In other words, you’re eligible for HECS-HELP if you’re an Australian resident or citizen who has gained entry to an undergraduate uni course.

How do you apply for a HECS-HELP loan?

It’s pretty straightforward. When you get to university, you sign up for HECS-HELP as part of the admission process. It usually means filling out a form or two.

You’ll need a tax file number. If you don’t have one of those then you can apply for one through the Australian Tax Office. It’s a good idea to sort this out a couple of months before you are due to start uni.

How much interest do you pay on your HECS-HELP loan?

The short answer is: NONE!

However, the government does increase all HECS-HELP debts to keep up with inflation.

“Hang on! What does that mean?!?”

Well… inflation is a word to describe the fact that the value of money almost always falls from year to year. The amount of your HECS-HELP loan is adjusted to compensate for that.

“Sorry! I still don’t know what you’re talking about!”

No problem. Here’s an example to help explain inflation works.

  • In the year 1990, a loaf of bread cost $2.00.
  • In 2017, a loaf of bread costs $3.50.
  • The loaves of bread are effectively identical, but it costs more money to purchase it in 2017.
  • This is because the value of the dollar has fallen in real terms. In other words you can buy LESS with a dollar in 2017 than you could in 1990. That’s how inflation works.
  • In Australia, our wages usually rise to keep up with inflation. If wages stayed the same and inflation kept going up, the value of our wages would fall in real terms – we’d be able to buy less despite being on the same salary.

Similarly, the government adjusts the value of your HECS-HELP debt to compensate for inflation. If they didn’t, the value of your HECS-debt would fall in real terms. In other words, the government would be able to buy fewer loaves of bread with the loan money when you pay them back, compared to when they first loaned you the money.

Hopefully that makes sense!

How does the government adjust for inflation?

Inflation is generally measured using a thing called the Consumer Price Index (CPI). Basically, how this works is the government takes a selection of everyday items (like groceries) and compares the price from year to year. The percentage increase in the price is used as a measure of inflation.

So… for example, if CPI rises 3% in 2015/2016, your HECS-HELP debt will increase by 3% as well.

This does not amount to an actual increase. In real terms, the value of your HECS debt stays the same.

By the way: when the government adjusts the value of your HECS debt it’s referred to as indexation.

When do I have to pay back my HECS-HELP loan?

Short answer is: you don’t have to pay back your HECS-HELP loan until you can afford to.

Currently, you don’t have to pay anything if you earn below $54,869 in a year.

Once your earnings exceed that amount, 4% of your income will go toward repaying your HECS-HELP loan.

In fact, the more you earn, the more you pay back. Have a gander at the below table, which sets out how much you pay based on your annual income.

2016-2017 Repayment income Repayment rate
Below $54,869 Nil
$54,869 – $61,119 4.0%
$61,120 – $67,368 4.5%
$67,369 – $70,909 5.0%
$70,910 – $76,222 5.5%
$76,223 – $82,550 6.0%
$82,551 – $86,894 6.5%
$86,895 – $95,626 7.0%
$95,627 – $101,899 7.5%
$101,900 and above 8.0%

Does a HECS-HELP loan constitute value for money?


In fact, it’s probably the cheapest loan you will ever have – because it’s interest free. And you don’t have to pay a cent until you start earning a reasonable wage.

Pretty darn good, if you ask me.