The HECS-HELP Threshold Hack: How to Keep More of Your Pay in Australia

Your Student Debt Just Got Less Scary

If you went to uni in Australia, you've probably got a HECS-HELP debt sitting in the background of your life like a subscription you forgot to cancel. Every year the ATO just... takes a chunk of your pay.

But here's what most people missed: the system completely changed from 1 July 2025, and if you understand the new rules, you can keep significantly more of your income.

The Big Change: Marginal Rates Are Here

Before July 2025, HECS repayments worked on a flat percentage of your entire income. Cross a threshold by even $1, and suddenly your whole income got hit with the repayment rate. It was brutal.

The old system (before 2025-26):

• Threshold was $54,435
• Earn $54,436? Pay 1% of your entire income = $544

The new system (2025-26 onwards):

• Threshold is $67,000
• Earn $67,001? Pay 15 cents on that $1 over the threshold = $0.15

Read that again. The difference is enormous.

Under the new marginal rate system, you only pay the repayment rate on the income above the threshold — not your whole income. This is the same way income tax works, and it's way fairer.

The New Thresholds and Rates

Here's exactly how it works for the 2025-26 income year:

• Below $67,000: You pay nothing
• $67,001 to $124,999: You pay 15 cents for each dollar over $67,000
• $125,000+: You pay $8,700 plus 17 cents for each dollar over $125,000

If your repayment income hits $179,286 or more, the compulsory repayment is 10% of your total repayment income (which is effectively the old flat-rate approach). You can check your exact HECS repayment with the new rates, updated for the 2025-26 marginal system.

The Strategy: Know Your Numbers

Here's where it gets tactical.

If you're earning close to $67,000, you might be able to keep your repayment income below the threshold through:

• Salary sacrificing into super — pre-tax super contributions reduce your repayment income
• Claiming all eligible deductions — work-from-home expenses, union fees, professional development
• Timing investment income — if you have shares or rental income, the timing of when you realise gains matters

Your HECS repayment income = taxable income + any total net investment loss + reportable fringe benefits + reportable super contributions. So it's not just your salary — it's the full picture.

If you're earning $70,000, your HECS repayment under the new system is just $450 (15c x $3,000 over threshold). Under the old system, you'd have been paying around $2,800. That's a $2,350 difference.

The Salary Sacrifice Super Play

This is the real hack within the hack. Extra pre-tax super contributions (salary sacrifice) reduce your HECS repayment income.

Say you earn $72,000. Without salary sacrifice, your HECS repayment is $750. But if you salary sacrifice $5,000 into super, your repayment income drops to $67,000 — and your HECS repayment is $0.

You've just redirected $5,000 into your future (super) instead of paying $750 to the ATO. Your super balance grows, and your take-home pain is minimal. You can model your salary sacrifice + HECS scenario to see the combined impact on your take-home pay.

Voluntary Repayments: Should You Bother?

Hot take: probably not.

Since June 2023, HECS-HELP debts are indexed to the lower of CPI or the Wage Price Index (capped at the WPI). This means your debt grows slower than inflation in most scenarios. It's essentially a 0% real interest loan.

Your money is almost always better off in super, an offset account, or invested — rather than paying down HECS faster.