HELP/HECS Repayments 2026-27: How the Marginal System Changes What You Owe

HELP/HECS Repayments 2026-27: How the Marginal System Changes What You Owe HEHomeLoanAI Editorial·1 July 2026 HELP/HECS repayments in 2026-27: what the marginal system means for your take-home pay Australia switched its HELP/HECS student loan repayment system to a marginal model from 2025-26, and the 2026-27 thresholds are now confirmed. The biggest difference from the old system: you only repay a percentage of the income above the threshold — not a flat percentage of your entire income. For many graduates, this means significantly lower annual repayments. For 2026-27, no repayment is required on repayment income up to $69,528. Above that, the rate applies only to the excess, not the whole amount. This is the same principle as marginal income tax. 2026-27 HELP/HECS repayment tiers at a glance Repayment income is your taxable income plus certain reportable additions (reportable fringe benefits, total net investment losses, and reportable super contributions). Here are the 2026-27 thresholds and rates: $0–$69,528: no compulsory repayment $69,529–$129,717: 15% of the amount over $69,528 $129,718–$186,050: $9,028 plus 17% of the amount over $129,717 $186,051 and above: 10% of total repayment income (this is the only tier where the rate applies to the full amount)

How much will you repay? Worked examples

Under the marginal system, the jump between tiers is smooth — no cliff where earning $1 more suddenly triggers thousands in extra repayment. Here is what you pay at common income levels: Repayment income $70,000: 15% × ($70,000 – $69,528) = $70.80 Repayment income $80,000: 15% × ($80,000 – $69,528) = $1,570.80 Repayment income $100,000: 15% × ($100,000 – $69,528) = $4,570.80 Repayment income $130,000: still within the first tier — 15% × ($130,000 – $69,528) = $9,070.80 Repayment income $150,000: $9,028 + 17% × ($150,000 – $129,717) = $9,028 + $3,448.11 = $12,476.11 Repayment income $190,000: $9,028 + 17% × ($190,000 – $129,717) = $9,028 + $10,248.11 = $19,276.11 Repayment income $200,000: 10% of $200,000 = $20,000 (note: this bracket applies the rate to the full amount)

Why this matters for mortgage applications

When a lender assesses your borrowing capacity, they look at your after-tax income minus all compulsory deductions — and HELP/HECS repayments are compulsory. Under the old flat-rate system, a graduate earning $100,000 might have faced a repayment of $8,000 (8% of the full amount). Under the 2026-27 marginal system, that same graduate repays $4,570.80. That difference of $3,429 per year — roughly $286 per month — is additional disposable income that can meaningfully improve your borrowing power. If you are carrying a HELP debt and planning to apply for a home loan in 2026-27, recalculate your net income using the marginal rates. Even a few hundred dollars per month in additional serviceable income can make the difference between approval and decline, especially given APRA's 3% serviceability buffer and the 6x DTI cap on new lending. Voluntary repayments still count The compulsory repayment system only kicks in once your repayment income crosses $69,528. Below that threshold, you are not required to repay anything — but you can still make voluntary repayments. Voluntary repayments reduce your outstanding balance directly and may help you clear the debt faster before it compounds with indexation. Note that from 2024, the indexation rate is capped at the lower of CPI or the Wage Price Index, which reduces the burden of rising indexation. Data sources All HELP/HECS repayment thresholds and rates above are verified against ATO guidance as at July 2026, covering the 2026-27 financial year. Repayment income includes taxable income plus reportable fringe benefits amounts, total net investment losses, and reportable super contributions. These are compulsory repayments administered through the tax system — they are not the same as voluntary additional payments you may choose to make directly to your loan account. Frequently Asked Questions Q: What counts as repayment income? A: Taxable income plus reportable fringe benefits, total net investment losses, and reportable super contributions. Your employer will typically use your expected annual income to determine withholding, but the final amount is reconciled through your tax return. Q: Does the marginal system mean I pay less overall? A: Yes, for most earners. Under the old system, earning $1 above a threshold could trigger a much higher repayment calculated on your entire income. Under marginal rates, you only pay the rate on income above the threshold. For someone earning $100,000, the marginal system saves thousands compared to the old flat-rate approach. Q: Is my HELP debt still indexed? A: Yes, HELP debts are indexed on 1 June each year. However, the indexation rate is now capped at the lower of the Consumer Price Index or the Wage Price Index. This change from 2024 reduced the impact of high inflation on outstanding balances. Q: Does a HELP debt affect my home loan application? A: Yes. Lenders treat HELP repayments as a compulsory deduction from your income, reducing your borrowing capacity. However, the marginal system often means lower annual repayments than many lenders' default HEIMS estimates — so request a manual serviceability calculation using your actual repayment figure rather than a generic percentage. Next steps Your HELP/HECS repayment directly affects your net borrowing capacity. Before applying for a home loan in 2026-27, an Arrivau licensed adviser can calculate your actual serviceability using the correct marginal repayment figure rather than a lender's generic estimate. An adviser will respond within one business day. Disclaimer: This article provides general information only and does not constitute financial or tax advice. HELP/HECS rules, thresholds, and indexation may change. Consult the ATO or a registered tax professional for advice specific to your circumstances. #help#hecs#student-loan#2026-27 Not sure what rate you'd get? Ask the AI — free, unbiased, and no sign-up required. It knows current Australian lending rules and can run the numbers for you. Ask the AI assistant → Keep reading Tax & Policy Australian Income Tax Rates 2026-27: 15% bracket kicks in, how much you save