The short answer
HECS-HELP and other study and training loans are indexed once a year, on 1 June, to keep the debt's real value in line with inflation or wages — not to charge interest. The rate applied on 1 June 2026 was 2.8%, the lowest since 2021. Since 1 June 2023, the rate has been set at whichever is lower: the Consumer Price Index (CPI) or the Wage Price Index (WPI), both measured over the year to the March quarter. Only debt that has been recorded on your account for more than 11 months is indexed in a given cycle, and only a voluntary repayment made directly to the ATO (ATO guidelines) before 1 June — not the extra tax withheld from your pay — reduces the balance that gets indexed.
What HECS/HELP indexation actually is
It is not interest
HELP loans (HECS-HELP, FEE-HELP, VET Student Loans and similar) do not charge interest in the way a bank loan does. What they do carry is indexation: an annual adjustment, applied by the ATO on 1 June, that keeps the loan's real value roughly steady against inflation or wage growth. It is easy to confuse the two because the effect on your balance looks the same — the amount owing goes up — but the legal mechanism, and the rules that limit it, are different from commercial loan interest.
It is separate from your compulsory repayment
Indexation and your compulsory repayment are two different processes that happen to land around the same time of year. Indexation adjusts the size of the debt. Your compulsory repayment — the amount withheld from your pay once your income crosses the repayment threshold — is what actually pays the debt down, and is worked out through your tax return. This guide covers indexation only; if you want the current repayment thresholds and marginal rates, see our HECS-HELP repayment thresholds guide.
How the indexation rate is calculated
The CPI formula behind HELP debts
Indexation is set under the Higher Education Support Act 2003. The CPI-based factor is calculated as the sum of the index numbers for the four quarters up to and including the March quarter of the current year, divided by the sum of the index numbers for the four quarters up to and including the March quarter of the previous year. The "index number" is the All Groups Consumer Price Index — the weighted average across Australia's eight capital cities — published quarterly by the Australian Bureau of Statistics (ABS). Because the calculation only needs March-quarter data, the rate is usually confirmed by the Government in the weeks after the ABS releases that figure, typically by late April, ahead of the 1 June application date.
Since 2023: whichever is lower, CPI or wages
Following the 2023 Universities Accord review, the Government legislated a change — the Universities Accord (Student Support and Other Measures) Act 2024, passed in November 2024 — so that HELP indexation is set at whichever is lower: the CPI-based factor above, or an equivalent factor based on the Wage Price Index (WPI), which measures wage and salary growth using the same ABS methodology. The change was backdated to 1 June 2023, so debts can no longer be indexed at a rate faster than wages are growing.
HECS/HELP indexation rates, 2023 to 2026
| 1 June indexation date | Rate first announced (CPI) | Rate actually applied | Why |
|---|---|---|---|
| 2023 | 7.1% | 3.2% | Recalculated once the 2024 reform passed; WPI was lower. The ATO automatically credited the difference to affected accounts in 2025 |
| 2024 | 4.7% | 4.0% | Same retrospective recalculation and automatic credit, applied alongside the 2023 correction |
| 2025 | n/a — calculated directly | 3.2% | First cycle where the lower-of-CPI-or-WPI rule applied at the time, not after the fact |
| 2026 | n/a — calculated directly | 2.8% | Lowest indexation rate since 2021 |
If your HELP debt was indexed in 2023 or 2024, you do not need to apply for the correction. The ATO applies the credit automatically to your account, visible in ATO online services through myGov.
The 11-month rule: new debt is not indexed straight away
Indexation on 1 June only applies to the part of your accumulated loan that has been recorded on your account for more than 11 months. If you enrolled in a unit and the HELP debt for it was added to your account within the last 11 months, that portion is not indexed at the next 1 June — it gets its first indexation the following year. This matters if you are weighing up whether to defer enrolling in a unit until after 1 June versus before it; the timing changes when that debt first becomes subject to indexation, not whether it eventually will be.
Why paying before 1 June can reduce what gets indexed
Tax withheld from your pay does not count
If your employer withholds extra tax because you have a HELP debt, that amount is not credited against your loan balance in real time. It sits with the ATO and is only applied to your HELP account once your tax return for that year is lodged and processed — which usually happens between July and October, well after the 1 June indexation date. That means the money destined to become this year's compulsory repayment is technically still part of your outstanding balance on 1 June, and it gets indexed along with everything else.
Only a voluntary repayment, received in time
A voluntary repayment — one you pay directly to the ATO, separate from payroll withholding — is credited to your account as soon as it is received. Made before 1 June, it reduces the balance that the indexation factor is applied to; every dollar paid off before the date never gets multiplied by that year's rate. The catch is processing time: the ATO only counts a payment once it clears, not once you initiate it. BPAY and bank transfers can take one to three business days, so a safe practical cut-off is around 25–26 May, not 31 May.
The 2025 one-off 20% reduction, and how it fit around indexation
Separately from the CPI/WPI reform, the Universities Accord (Cutting Student Debt by 20 Per Cent) Act 2025 — which became law on 2 August 2025 — cut every outstanding HELP, VET Student Loan and related debt by 20%, applied retrospectively to balances as at 1 June 2025. The ATO processed the reduction first, then applied that year's 3.2% indexation to the already-reduced balance, not the original one. This was a one-off correction to the balance itself; it does not change how indexation is calculated in any other year, and it is separate from the repayment-threshold changes covered in our repayment thresholds guide.
How to check your own HELP balance and indexation history
Your current HELP balance, indexation history and any automatic credits are visible in ATO online services, accessed through myGov. This is the only reliable way to see the exact dollar effect of indexation on your own account — the rates above tell you the percentage, but the dollar amount depends on your personal balance and when your debt was originally recorded.
Records to keep
- Confirmation or receipt for any voluntary repayment made directly to the ATO, including the date it was processed, not just initiated
- Your ATO online / myGov screenshot or statement showing your HELP balance before and after 1 June each year
- Notice of any automatic indexation credit applied to your account for the 2023 or 2024 recalculation
- Records of when each unit of study, and its associated HELP debt, was added to your account, if you are tracking the 11-month rule
- Correspondence from your provider or the Department of Education about loan balances, in case of a dispute
Quick checklist
- Check your current HELP balance and indexation history in ATO online via myGov
- Confirm whether any part of your debt is within the 11-month exemption window
- If making a voluntary repayment to reduce this year's indexed balance, pay by around 25–26 May, not 31 May
- Keep a record of the payment date the ATO actually processed it, not the date you initiated it
- Remember indexation and your compulsory repayment are calculated separately — check our repayment thresholds guide for the latter
Your compulsory HECS repayment for the year is worked out automatically as part of your tax return — it has nothing to do with how much gets indexed each 1 June. a registered tax agent (see the directory)
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*Disclaimer: This is general information only and does not constitute personal tax advice. Consult a registered tax agent for advice tailored to your specific situation. Always verify against the latest ATO guidelines at ato.gov.au.*
*Disclaimer: general information only — not personal tax advice. HECS/HELP indexation is administered by the ATO under the Higher Education Support Act 2003 — confirm your own balance and indexation history through ATO online via myGov.*