How to pay off HECS Debt Earlier? Everything you need to know

Feb 27, 2024

HECS debt is an interest-free loan that is provided to students for higher education. It is also known as HELP or Higher Education Loan Programme. When you apply for this loan, the government of Australia will provide tuition fees directly to your institution.

Once your repayment income has increased then compulsory repayment, now you are eligible to pay your debt. All you have to do is pay the debt and make sure to tell the accounts team so they can update your tax declaration form.

There is no policy that you should pay off your HEC debt in a certain time but some people choose to pay their debts earlier so they do not have to face any problems later on.

Types of HECS Debt

Let’s have a look at the different types of it . There are five different types of HECS/HELP debt:


  • HECS HELP can help you cover your tuition fees for Commonwealth-supported places like universities and other higher education providers.
  • This student loan is interest-free but with every passing year, it will increase a bit.
  • This student loan is interest-free but with every passing year, it will increase a bit.


  • FEE-HELP covers the tuition fee for non-Commonwealth supported places like private universities and overseas students.
  • It has the same repayment plan as HECS-HELP, as it involves a tax payback after your income crosses a certain threshold.
  • It also adds interest on the loan money and this interest rate is according to the 10-year Australian bond rate, which is 0.601% and a yield rate of 4.100%.


  • SA-HELP involves all the student services and amenities like student union fees and health services for universities and higher education providers.
  • Interest rates apply to your debt according to the 10-year Australian bond rate.
  • You have to repay your debt once your studies are completed and you start earning an income above a certain threshold level.


  • OS-HELP deals with the debt for overseas students. Australian citizens or people having a resident permit in Australia are eligible for this type of debt.
  • You have to repay your debt once you come back to Australia and start earning an income of more than a certain threshold level.
  • Interest applied to your debt will be according to the Bank Bill Rate of the Australia Reserve Bank.


  • This debt program helps you with your business in the early years so you can stabilise your business and develop entrepreneurial skills.
  • It will cover all the course fees for the programs.
  • The payback debt starts once your income from your setup has exceeded a certain threshold.
  • Interest rates are also according to the 10-year Australian Government Bond Rate just like HECS-HELP.

How is HECS repayment calculated?

HECS repayment is calculated by the Australian Taxation Office. You have to pay back this debt once you have started earning a good income that has reached above a certain threshold level. ATO will calculate your repayment depending on the type of HECS that you have taken and your income.

A HECS repayment calculator requires the following information:

  • The income year for which repayment is calculated.
  • Residency status of the taxpayer.
  • Estimated reportable fringe benefits amount.
  • Estimated net investment loss.
  • Estimated taxable income for the income year.

How to Pay off HECS Debts Earlier?

Before making that decision, you must keep your financial condition in mind. This is your study loan in which the government allows you to achieve your higher education but you have to pay it back. Once you get a high-paying job you can pay the debt off.

When you have decided to pay off your HECS debts, you can have the following options to pay your debt earlier:

Lump Sum Payments

You can make lump sum payments towards your HECS debt throughout the year via BPAY or credit card.

Salary Sacrifice or Packaging

In Salary sacrifice or packaging, one part of your salary is fixed for your benefits. This is a helpful option for people who want to pay off their debts.

For example, If you have a monthly income of $1000 you will get all the income and will pay tax and debt afterward. But if you choose salary sacrifice or packaging, it will deduct a certain amount, let’s say $200 from your salary, and receive the remaining salary of $800 as it is. Now you do not have to worry about your debts because they get paid each month.


Benefits Of Paying HECS DebtCons of Not Paying HECS Debt
Reduced debt burden: Paying off your debt early frees you from the obligation of ongoing repayments, giving you more financial flexibility.Accumulating debt and interest: While HECS debt doesn’t accrue traditional interest, it is subject to annual indexation, which can increase your overall debt over time.
Improved credit score: Consistent repayments can positively impact your credit score, making it easier to access loans and other forms of credit in the future.Potential tax penalties: If you neglect your HECS debt for an extended period, the Australian Taxation Office (ATO) may impose penalties on your tax return.
Eligibility for government benefits: Paying off your HECS debt can make you eligible for certain government benefits, such as Austudy or Family Tax Benefit Part B, earlier than those with outstanding debt.Reduced access to government benefits: Having unpaid HECS debt can affect your eligibility for some Centrelink benefits.
Potential for higher returns: If you have extra income and believe you can earn a higher return on investment than the indexation rate, investing that money instead of making voluntary repayments could be beneficial.Debt collection action: The ATO can take legal action to recover unpaid HECS debt, including garnishing your wages or placing a lien on your assets.


Paying off your HECS debt can provide a sense of financial freedom. Once you have done paying all of your HECS, you can put that money towards other financial goals, like investment opportunities or to maximise your savings. It can provide you with peace of mind and financial freedom as well.

If you want to pay off your HECS debt earlier, you can contact us today.


Does your HECS Debt die with you?

No. Unlike traditional debt, your HECS debt doesn’t burden your loved ones. It’s canceled upon your death. While your executor handles your final tax return and ensures any compulsory HECS repayments for that year are made, the remaining debt disappears, offering peace of mind for you and your family.

How long on average does it take to pay off HECS?

Unfortunately, there’s no one-size-fits-all answer for how long it takes to repay a HECS debt. It depends on your starting amount (larger debts take longer), your income (higher income means faster repayment through compulsory deductions), and any voluntary repayments you make. The average HECS debt of $25,000 might take roughly 12.5 years to repay with just compulsory deductions, but this is just an estimate. To get a more accurate picture, consider using the government’s repayment calculator or talking directly to the ATO.

Who has the highest hecs debt in australia?

The Australian Taxation Office (ATO) doesn’t publicly disclose individual HECS debt amounts due to privacy concerns. Therefore, it’s impossible to say definitively who has the highest HECS debt in Australia.

Why is HECS so expensive?
  • Cost of education: University education is inherently costly. HECS reflects a portion of these costs, including infrastructure, faculty, and resources.
  • Gradual repayment: While technically interest-free, HECS debt is indexed to inflation annually. This means the total amount you repay increases over time to account for the decreasing value of money. In high inflation periods, this can feel like accumulating interest.
  • Large debt burden: The total cost of some degree can be significant, leading to a high initial HECS debt. This can feel overwhelming, especially for recent graduates starting their careers.
B M Peachey

B M Peachey, has over 15 years of experience investing in property and the stock market, in both New Zealand and Australia. She has a post-graduate degree, with qualifications in Finance and Mortgage Broking and in Accounting and Bookkeeping. She is passionate about ensuring people have access to credible, reliable, and easy to understand information to help them get in control of the life they REALLY want to live.<

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