Indexation, not interest
Your HELP debt isn't charged interest. Instead it's indexed on 1 June each year so it keeps its real value against inflation. Since the 2024 reforms, indexation is capped at the lower of CPI and the Wage Price Index (WPI) — a change made after the 2023 spike, and backdated to help borrowers.
The one-off 20% reduction
In 2025 the government applied a one-off 20% reduction to all student loan balances, calculated on what you owed on 1 June 2025 (before that year's indexation). If you had a $30,000 debt, roughly $6,000 was wiped. Your current balance already reflects this cut, so don't subtract it again when using the calculator.
Recent indexation rates
| Year (1 June) | Indexation applied |
|---|---|
| 2023 | 7.1% |
| 2024 | 4.0% (revised under the new cap) |
| 2025 | ≈ 3.2% |
Figures are indicative; the ATO publishes the confirmed rate each year. The calculator lets you set your own indexation assumption for payoff projections.
Why timing matters if you're close to paying it off
Indexation hits the balance still outstanding on 1 June. A voluntary repayment made before then reduces the amount that gets indexed. If you're within a year or two of clearing your debt, that timing can save you a small amount — model it in the pay off early guide.
Related
Frequently asked questions
When is HECS indexed?
On 1 June each year. It is applied to the balance still outstanding at that date.
What is the 2025 HECS indexation rate?
About 3.2%. Since 2024 indexation is capped at the lower of CPI and the Wage Price Index.
Did HECS debts really get a 20% cut?
Yes. A one-off 20% reduction was applied to student loan balances as at 1 June 2025, before that year's indexation.