Is it worth making voluntary HECS repayments?

Sometimes, once your Emergency Fund is built, you're investing at least 10% of your pay and you've got no consumer debt. Before then, your money usually works harder elsewhere.

Should I pay off my HECS before indexation?

If you're planning an extra payment anyway, paying before 1 June means that amount won't be indexed that year. Pay a few days early so the ATO has it processed in time. It's not worth draining your buffer for.

Does HECS charge interest?

Not like a credit card. The balance is indexed once a year to the lower of CPI or wage growth. In 2026 that was 2.8%.

Do I have to pay HECS if I earn under the threshold?

No compulsory repayment for that year. For 2026-27 the threshold is $69,528. You can still make voluntary repayments if you want to.

Should I pay off HECS or save for a house deposit?

It depends on your timeline. A lender or broker can tell you how your HECS affects your borrowing. For most people early on, building savings and investing comes first.

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Should I pay off HECS early?

An emergency jar and an investing seedling in front, study loan quiet in the background.

HECS comes out of your pay on its own. Build your buffer and investing first. Extras can wait.

For most people starting out, no rush. HECS (HELP) is already paid off automatically through your tax once you earn enough. It doesn't charge interest like a credit card. It goes up with indexation once a year. So the usual DoshHero order is: build your Emergency Fund, get your Investing slice to at least 10% of your pay, then think about extra HECS payments if you still want to.

That's the lean. Here's the fair version.

How does HECS actually get paid back?

Once your repayment income goes over the threshold, a compulsory repayment kicks in. From 2025-26 it's only worked out on the income above the threshold, not your whole income.

For 2026-27, the ATO threshold is $69,528. Earn under that and there's no compulsory repayment for the year. Earn over it and you repay 15c for each dollar above it (higher bands kick in at higher incomes).

If you ticked the study loan box on your TFN declaration, your employer takes a bit extra out of each pay. That money gets applied to your HECS when you lodge your tax return. You don't have to do anything else. The full picture: What even is the HECS repayment threshold?

What is HECS indexation?

On 1 June each year, the part of your loan that's been sitting unpaid for more than 11 months goes up by CPI or wage growth (WPI), whichever is lower. In 2026 that was 2.8%.

That's the "my HECS went up and I didn't borrow more" moment. It's not interest in the credit card sense. It goes up by inflation or wage growth, whichever is lower, so it never grows faster than prices. What even is indexation (on HECS)?

And if you had a HECS debt on 1 June 2025, it got a one-off 20% cut. Check your balance in myGov if you haven't since.

Should I pay off HECS or invest?

Here's why most first-job people lean toward investing and a buffer first:

HECS is cheap debt. It goes up by inflation or wage growth, whichever is lower, so it never grows faster than prices. It doesn't stack up the way credit card interest does.
It pays itself. Repayments come out of your pay automatically as your income grows.
Your Emergency Fund protects everything else. Money you put on HECS isn't in a pot you can grab when the car breaks or shifts dry up.
Investing has time on its side. The earlier you start, the more years your money has to grow and, one day, pay you an income. Compound growth shows why.

When paying extra on HECS can make sense

To be fair, there are times it's worth a look:

You're close to paying it off. A small balance is satisfying to clear, and paying before 1 June means that chunk won't get indexed again. Pay a few days early so the ATO has it processed in time.
You're applying for a home loan soon. Lenders look at what's coming out of your pay. Ask a lender or broker how your HECS affects your borrowing.
Everything else is sorted. Emergency Fund built, investing at 10% or more, no consumer debt, and you just want it gone. That's a valid choice.

What not to do

Don't empty your Emergency Fund or pause investing to throw money at HECS. And if you've got a credit card or buy now, pay later balance, that's the louder bill. Clear that first. How do I even pay off a credit card?

HECS isn't a moral failing or something to panic about. It's the cost of your study, paid back over time as you earn. Know how it works, let it do its thing, and keep building.

The free First Pay Playbook has a module on debt, including where HECS fits.

FAQ

Is it worth making voluntary HECS repayments?: Sometimes, once your Emergency Fund is built, you're investing at least 10% of your pay and you've got no consumer debt. Before then, your money usually works harder elsewhere.
Should I pay off my HECS before indexation?: If you're planning an extra payment anyway, paying before 1 June means that amount won't be indexed that year. Pay a few days early so the ATO has it processed in time. It's not worth draining your buffer for.
Does HECS charge interest?: Not like a credit card. The balance is indexed once a year to the lower of CPI or wage growth. In 2026 that was 2.8%.
Do I have to pay HECS if I earn under the threshold?: No compulsory repayment for that year. For 2026-27 the threshold is $69,528. You can still make voluntary repayments if you want to.
Should I pay off HECS or save for a house deposit?: It depends on your timeline. A lender or broker can tell you how your HECS affects your borrowing. For most people early on, building savings and investing comes first.