HECS Voluntary Repayment Calculator
See how much faster extra repayments clear your HECS debt, how much indexation you save, and what you give up by not investing instead.
Should You Make Voluntary HECS Repayments?
HECS-HELP is an unusual debt — it doesn't charge interest in the traditional sense, but it does grow with CPI indexation each year. The decision to make voluntary repayments comes down to a simple comparison: is the indexation rate on your HECS debt higher or lower than the after-tax return you could earn by investing the same money?
When Voluntary Repayments Win
Voluntary repayments are mathematically better when:
- The HECS indexation rate is high (as in 2022–23 when it reached 7.1%)
- Your income is near the lower thresholds so mandatory repayments are small
- You have a large balance that is growing faster than you're repaying it
- Your investment alternatives have low returns or you prefer certainty
When Investing Wins
Investing the money instead may be better when:
- HECS indexation is low (e.g. 0.6% as in 2021)
- Your income is rising quickly and mandatory repayments will clear the debt in a few years anyway
- You can reliably earn after-tax returns well above the indexation rate
- The money could be used for a home deposit where you'd save more on mortgage interest
The Timing Advantage
Even if investing wins on average, there is one clear benefit to strategic HECS repayments: timing them before 1 June. Making a voluntary payment of any amount in May reduces the balance on which indexation is calculated, providing an immediate guaranteed return equal to the indexation rate for that year.
Compulsory Repayments vs Voluntary
Compulsory HECS repayments are withheld through PAYG and credited after you lodge your tax return — typically after 1 June. They do not reduce the pre-indexation balance. Only payments made directly to the ATO before 1 June count for indexation reduction purposes.