Should I pay off HECS early?
The short answer: it depends on your other debts and what you'd do with the money instead. HECS-HELP is the cheapest debt most Australians will ever have — it's interest-free in the sense that indexation tracks inflation (capped at the lower of CPI or WPI since 2024), and it never causes default or affects your credit score.
Many financial advisers' rule of thumb: pay off higher-interest debts (credit cards, personal loans, car loans) first, keep your HECS, and only make voluntary repayments once you have an emergency fund and are on track for other goals. The 2.8% indexation for 2026 is well below what a diversified investment would typically earn, which is why paying HECS early is often not the best use of spare cash.
Do voluntary repayments get a bonus?
No. The voluntary repayment bonus (a 5% discount on voluntary repayments of $500 or more) was abolished on 1 January 2017. There is no longer any financial reward for paying extra.
Are there reasons to pay early?
Yes, some: peace of mind, simplifying your financial life, or if you're moving overseas and want to close the debt (you must repay it while overseas anyway via the ATO). You can't claim a tax deduction for repayments, so there's no tax benefit to paying early — the maths is purely indexation (your effective interest) vs what else the money could do.
Check your own numbers
Your compulsory repayment depends only on your income, not your balance — so paying early doesn't reduce your annual compulsory repayment, it just shortens the life of the debt. Use the calculator to see your current repayment: use the HECS-HELP calculator.