HECS / HELP Repayment ROI Calculator
Should you make voluntary HECS repayments — or invest that money? It depends on the indexation rate vs what you can earn. This calculator tells you exactly when paying early makes sense.
Invest instead
Your savings return (4.5%) comfortably exceeds HECS indexation (3.2%). You earn more keeping the money invested than by paying off HECS early.
Your situation
This year's mandatory repayment
$7,150
Effective HECS rate: 6.5% of your income
Payoff (mandatory only)
5y
without extra payments
Payoff (with extra $5,000/yr)
4y
1y sooner
Indexation saved by paying early
$1,127
vs $3,404 total indexation if mandatory repayments only
Year-by-year: mandatory vs with extra payments
Closing HECS balance each year until debt-free.
| Year | Mandatory balance | With extra payments | Indexation (mandatory) |
|---|---|---|---|
| Year 1 | $28,970 | $23,970 | $1,120 |
| Year 2 | $21,966 | $11,806 | $927 |
| Year 3 | $14,500 | $378 | $703 |
| Year 4 | $5,949 | PAID! | $464 |
| Year 5 | PAID! | — | $190 |
HECS/HELP repayment thresholds and indexation rates are updated annually by the ATO. The indexation rate used here is an estimate — actual rates are announced each June. Voluntary HECS repayments made directly to the ATO (not through payroll) do not attract a bonus as of FY2022-23. Repayment income may differ from taxable income; consult the ATO website for exact definitions. General information only — not financial advice. ATO HELP guidance
Frequently asked questions
Should I pay off HECS early or invest the money?
It depends on the HECS indexation rate vs what you can earn with the money. HECS is indexed to CPI each June (it was 3.2% in FY2024-25, 7.1% in FY2023-24). If your savings account or investment return is higher than the indexation rate, you're better off investing. If indexation is higher (as it was in FY2023-24), paying down HECS is the mathematically better choice. There's no tax deduction for HECS repayments, so unlike investment loan interest, there's no tax benefit to consider.
How is HECS repayment calculated?
HECS is automatically withheld by your employer once your income exceeds the minimum repayment threshold ($54,435 in FY2025-26). The repayment rate increases from 1% to 10% depending on your income bracket. Importantly, mandatory repayments are calculated on your repayment income (taxable income + reportable fringe benefits + total net investment losses + reportable employer super contributions), which can be higher than your salary alone.
Is there a bonus for making voluntary HECS repayments?
As of 1 January 2017, the ATO removed the bonus for voluntary repayments ($500 minimum bonus was abolished). You can still make voluntary payments directly to the ATO to reduce your balance faster, but there is no discount. The benefit is purely mathematical: the faster you pay off HECS, the less indexation you accumulate.
Does HECS affect my borrowing capacity for a mortgage?
Yes. Lenders assess your mandatory HECS repayment as a debt commitment that reduces your net income. For someone earning $120,000 with a $50,000 HECS debt, mandatory repayments are around $7,800/year — which reduces assessed borrowing capacity by roughly $150,000–$200,000 depending on the lender's assessment rate. This is a strong argument for paying HECS down before applying for a large mortgage.