How HECS indexation works in Australia, and how it has changed debts over time

Before 2023, the rate was based solely on the Consumer Price Index (CPI), worked out by comparing the sum of four quarters of CPI against the same four quarters a year earlier, then rounding to three decimal places.

Since 1 June 2023, the rate has instead been the lower of the CPI factor or the Wage Price Index (WPI) factor, calculated the same way but using wage growth instead of price growth. The change was legislated under the Universities Accord (Student Support and Other Measures) Act 2024 and backdated to 1 June 2023.

A second, smaller change followed in 2025: the reference quarter moved from March to December. The rate applied on 1 June 2026 was calculated from the December 2025 quarter and the three quarters before it, compared with the same four quarters a year earlier, producing a factor of 1.028, matching the published rate. This calculation can be recreated closely from ABS price data, confirming CPI, not wage growth, was the lower measure for 2026.

Wage growth capped indexation at 3.2% in 2023 and 4.0% in 2024, well below the 7.1% and 4.7% that consumer prices alone would have produced. From 2025, CPI became the lower measure instead.

The rule is now built into the Higher Education Support Act 2003. For HELP debt, the annual indexation factor is based on whichever measure is lower for the relevant period: consumer price growth or wage growth. The same lower-of-CPI-or-WPI approach also applies to VET Student Loans and other related student loan types.

The binding measure can change from year to year. In 2023 and 2024, WPI was lower than CPI, so WPI capped the rate. In 2025 and 2026, the CPI-based calculation was lower, so CPI was the binding measure.

The minimum repayment threshold rose 23.1% in 2025–26, from $54,435 to $67,000, alongside a switch from a flat percentage of total income to a marginal system that only charges repayments on income above the threshold.

Compulsory HELP repayments are worked out through the income tax system, rather than deducted directly from the loan balance as they are withheld from pay. Money withheld from pay throughout the year, known as PAYG withholding, is not credited to a HELP account until a tax return is lodged and assessed. Indexation, by contrast, applies on 1 June to whatever balance is sitting on the loan that day. A borrower can have money withheld all year and still see their balance indexed in full, because the withheld amount has not yet reached the loan account.

Voluntary repayments work differently: they reduce the balance as soon as the ATO processes them, so a voluntary payment made before 1 June does reduce that year's indexation. It is this distinction between payment types, not repayments in general, that explains why some balances kept growing despite regular payments through the year.

For an average HELP balance of $27,739, the 2026 indexation rate of 2.8% would add about $777 before repayments or other balance changes. This is an estimate only, because the actual amount indexed depends on how much of the debt is more than 11 months old, whether voluntary repayments were processed before 1 June, and whether any other adjustments apply.