Every 1 June, the Australian Government increases the part of your HECS-HELP debt that has been unpaid for more than 11 months. The rate is the lower of the Consumer Price Index (CPI) or the Wage Price Index (WPI). On 1 June 2026 it was 2.8%. On a $40,000 debt, that adds $1,120.
- Indexation is applied once a year, on 1 June.
- The rate is the lower of CPI or WPI.
- It applies to the part of the debt unpaid for more than 11 months.
- The 1 June 2026 rate was 2.8%. It was 3.2% in 2025 and 4% in 2024.
- It is not interest. No one charges you a rate that grows during the year.
What indexation is
A HELP debt is a loan with no interest charge. To keep the debt from losing value over time, the government indexes it once a year. That means it multiplies the outstanding balance by a rate tied to prices or wages.
The rule has three parts. The rate is applied on 1 June. It uses the lower of the CPI and WPI increases. It affects the part of the debt that has been unpaid for more than 11 months, so a debt you took out this year is not hit in its first June.
The rates by year
| Year | Indexation rate |
|---|---|
| 2026 | 2.8% |
| 2025 | 3.2% |
| 2024 | 4% |
| 2023 | 3.2% |
| 2022 | 3.9% |
The 2023 and 2024 figures are the revised rates. They were first set at 7.1% and 4.7%, and the government later recalculated them using the lower of CPI or WPI.
Indexation against repayment
Take a debt of $40,000 at the 1 June 2026 rate of 2.8%. Indexation adds $1,120. Compare that with the compulsory repayment, which depends on repayment income. For 2026 to 2027, nothing is repaid up to $69,528. Above that, you repay 15 cents for each dollar up to $129,717.
| Repayment income | Repays in a year | Indexation added | Result | Time to clear |
|---|---|---|---|---|
| $60,000 | $0 | $1,120 | Debt grows | Never at this income |
| $80,000 | $1,571 | $1,120 | Debt shrinks | About 43 years |
| $100,000 | $4,571 | $1,120 | Debt shrinks | About 10 years |
| $130,000 | $9,076 | $1,120 | Debt shrinks | About 5 years |
At $60,000, the income is under the threshold, so the debt only grows. At $80,000, the repayment of $1,571 is larger than the $1,120 added, so the debt falls.
Time to clear holds income flat and indexation at 2.8%, which makes it a guide only. Pay rises shorten it, and a different indexation rate changes it. The sums apply indexation to the whole balance after each year’s repayment, which is a simplification of the 11 month rule.
Why it feels like interest
Your balance goes up each June, and the effect compounds. A $40,000 debt that nobody repays grows with each indexation. That is why the repayment table above flags the low income case, where the debt grows. The difference from interest is that the rate is set by CPI or WPI, not by a lender, and it is applied once a year.
How to work out your own indexation
Multiply the part of your debt that has been unpaid for more than 11 months by the rate. For a debt of $40,000 at 2.8%, that is $40,000 × 2.8 ÷ 100 = $1,120. If $5,000 of that debt is new and not yet 11 months old, only the other $35,000 is indexed, so the added amount is $980. Your myGov account shows your balance after each 1 June.
A year-by-year picture
Here are the first eight years for a student who earns $100,000 and owes $40,000, with income held flat and indexation at 2.8%.
| Year | Repayment | Balance after indexation |
|---|---|---|
| 1 | $4,571 | $36,421 |
| 2 | $4,571 | $32,742 |
| 3 | $4,571 | $28,960 |
| 4 | $4,571 | $25,072 |
| 5 | $4,571 | $21,076 |
| 6 | $4,571 | $16,967 |
| 7 | $4,571 | $12,743 |
| 8 | $4,571 | $8,401 |
The repayment stays the same each year because it comes from income, not from the balance. The balance falls by the repayment, then rises a little with indexation, so the fall slows as the years pass.
When your income is below the threshold
Below $69,528 you repay nothing, so indexation is the only thing that moves your balance. On an income of $60,000, a debt of $40,000 reaches about $45,923 after five Junes at 2.8%. The rate changes each year, so treat that as an illustration. Once your income passes the threshold, repayments start and the balance begins to fall.
Does a smaller debt change your repayment?
No. At $80,000 the compulsory repayment is $1,571 whether you owe $10,000 or $40,000. A smaller debt only means you finish sooner. The repayment stops in the year the balance reaches zero.
Where to find your balance
Your current HELP balance is in your myGov account, linked to the ATO. Check it after each 1 June to see what indexation added, and again after you lodge your tax return, because compulsory repayments are worked out from your return. Put the new balance into the calculator, then compare the repayment with the indexation added.
Mistakes to avoid
- Calling it interest. HELP debts carry no interest charge. Indexation is a yearly adjustment and the rate varies.
- Using an old rate. The rate is reset every year. Use the one for the year you are planning.
- Assuming a bigger debt means a bigger repayment. Your repayment depends on your repayment income.
- Forgetting what counts as income. Repayment income is taxable income plus reportable fringe benefits, net investment losses, reportable super contributions and exempt foreign employment income.
Voluntary repayments
You can pay extra toward the debt. Whether it helps depends on timing. Indexation works on the part of the debt that is still unpaid on 1 June, so the date of a payment can matter. Check the ATO page for how voluntary payments are applied, and keep a record of the date.
Questions to ask before you pay extra
- What is the current indexation rate compared with what my savings earn?
- Will my compulsory repayment clear the debt without help, or will it grow?
- Do I have other debts that cost more?
- Do I need the cash for a deposit, an emergency fund or a move?
These are the questions, not the answer. The right choice depends on your own numbers. This page does not give financial advice.
Calculators that help
- HECS-HELP Repayment Calculator: your repayment, years to clear and the effect of indexation.
- Australian GPA Calculator: your GPA on the Australian 7-point scale.
- Australia Student Visa Funds Calculator: funds needed for an Australian student visa.
Questions students ask
What is the HECS-HELP indexation rate?
On 1 June 2026 it was 2.8%. It is the lower of the CPI and WPI increases. It was 3.2% in 2025 and 4% in 2024.
When is HECS indexation applied?
On 1 June each year, to the part of your debt that has been unpaid for more than 11 months.
Is indexation the same as interest?
No. A HELP debt does not carry interest. Indexation raises the balance once a year by the lower of CPI or WPI.
Does indexation affect my repayment?
Your compulsory repayment depends on your repayment income, not on your balance. Indexation changes how long the debt lasts, or whether it grows when your income is low.
Does a new debt get indexed in its first June?
Only the part of the debt that has been unpaid for more than 11 months is indexed, so a recent debt may not be affected yet.
