It's not like other debt
A HELP debt has no interest and no fixed monthly payment — it only grows by indexation and only comes out of your pay when you earn enough. That makes it very different from a credit card or mortgage, and it's why "pay it off first" isn't automatically the right move.
When paying early can make sense
- You're close to clearing it. A voluntary payment just before 1 June avoids indexation on that amount.
- Indexation is outpacing your return. If your savings earn less (after tax) than the indexation rate, reducing the debt can be the better "return".
- You want it gone before a big loan. A HELP debt reduces your borrowing power because lenders count the repayment as a commitment.
When it usually doesn't
- You have higher-interest debt. Credit cards or personal loans almost always cost more than HELP indexation — clear those first.
- You'd drain your emergency fund. Locking cash into a debt with no interest and flexible repayment is rarely worth the liquidity risk.
- You can invest for more. If your expected after-tax return beats indexation, investing may leave you ahead.
Add your balance and a voluntary amount in the calculator to see how many years it shaves off — then weigh that against what the same money could do elsewhere.
A note on getting the timing right
If you do make a voluntary repayment, doing it before 1 June means that amount escapes the coming year's indexation. See HECS indexation for the detail.
Related
Frequently asked questions
Is it worth paying off HECS early?
Sometimes. Because HELP is interest-free and income-based, clearing higher-interest debt or investing often wins — but paying just before 1 June can avoid indexation, and it lifts your borrowing power.
Does HECS affect my home loan?
Yes. Lenders count your compulsory HECS repayment as an ongoing commitment, which can reduce how much you can borrow.
Do voluntary repayments still help now the 20% cut is done?
They can, especially close to payoff or if indexation beats your after-tax savings rate. Model it in the calculator before deciding.