Guide
What is HECS indexation?
Indexation is an annual adjustment applied to the unpaid part of your HELP debt, on 1 June each year. It keeps the real value of the debt in line with inflation. Indexation applies only to the portion of your loan that has remained unpaid for more than 11 months.
Since the November 2024 changes, the indexation rate is the lower of the Consumer Price Index (CPI) or the Wage Price Index (WPI), so your debt can no longer grow faster than wages. The 2026 rate is 2.8%.
When does indexation apply?
Indexation is applied on 1 June each year, to the part of your accumulated HELP debt that has been unpaid for more than 11 months. If you've paid off your entire debt before 1 June, no indexation applies. If you make a voluntary repayment, it reduces the balance that gets indexed.
Historical indexation rates
Recent ATO indexation rates: 2026: 2.8%, 2025: 3.2%, 2024: 4% (restated from 4.7%), 2023: 3.2% (restated from 7.1%), 2022: 3.9%, 2021: 0.6%, 2020: 1.8%. The 2024 and 2023 rates were restated following the lower-of-CPI-or-WPI legislative change.
How does indexation affect my repayment?
Indexation grows your loan balance, but your annual compulsory repayment is calculated on your repayment income, not your balance. To see what you'll repay at your income, use the calculator: use the HECS-HELP calculator.
What indexation does not do
Indexation is not interest. There is no ongoing interest charge on a HELP debt and nothing compounds through the year. The balance is adjusted once, on 1 June, and then sits still until the next 1 June. That single difference is why a HELP debt behaves unlike a credit card or a personal loan, and why the only date that matters for timing a voluntary repayment is the end of May.
It also does not touch the part of your balance that has been paid off during the year, or any amount that has been on the account for less than 11 months. A compulsory repayment assessed for the year just ended reduces the balance before the next indexation event, so repayments and indexation interact in your favour rather than stacking.
Indexation does not change your compulsory repayment either. That figure is worked out from your repayment income against the ATO's thresholds, not from how large your balance is. Someone with a $10,000 balance and someone with a $90,000 balance on the same income make exactly the same compulsory repayment; indexation only affects how many years of repayments remain.
FAQ
Q: When does HECS debt get indexed? A: On 1 June each year. Indexation applies only to the part of the balance that has been unpaid for more than 11 months, so amounts added in the current year are not indexed straight away.
Q: What is the HECS indexation rate for 2026? A: 2.8%, applied on 1 June 2026. Since the 2023-24 year indexation has been the lower of CPI and WPI, which caps it when wage growth falls behind prices.
Q: Is indexation the same as interest? A: No. Interest compounds on an outstanding balance at a set rate. Indexation is applied once a year and is designed to hold the debt at its real value against inflation rather than to charge you for borrowing.