How does HECS work? The ultimate guide

September 25, 2024

If you’re thinking about enrolling in a uni course, you’ve no doubt considered getting a HECS-HELP loan. But how the HECS does the scheme actually work? Here's everything you need to know.

If you’ve just enrolled in a higher education course—or you’re going to soon—you probably just want to get on with your studies, without thinking about boring financial details… and we don’t blame you!

Although it can be tempting to see HECS debt as a “future-me problem”, you will eventually have to think about paying back your loan. So it’s worth knowing at least the basics of how it works.

In this guide we look at the what, when and how of taking on a HECS-HELP loan. If you want to know more about how to repay it after you graduate, check out our other guide on how to pay off your HECS debt .

What is HECS?

In very simple terms, you can think of it as borrowing money from the government to invest in your studies. The government pays for your tuition fees until you've graduated and are earning a cetrain amount of money, and then you will pay them back. 

The scheme was introduced in the 80s (by the Hawke government, in case you were wondering) with the goal of making tertiary education more accessible to more Australians. As is the case with government programs, it has evolved quite a bit since it was first introduced.

Even though it’s still often referred to simply by the acronym HECS (which stands for Higher Education Contribution Scheme), these days, the loan you will most likely receive is technically called HECS-HELP (for Higher Education Loan Program).

The amount you will borrow—and eventually pay back to the government—is based on the particular course you do, and how many subjects you complete.

Does everyone qualify for HECS?

While HECS-HELP is available to many higher education students in Australia, you do need to meet some criteria to qualify.

You need to:

• Be enrolled in a Commonwealth supported place (CSP)
• Meet citizenship and residency requirements
• Have enough HELP balance and Student Learning Entitlement available (these accrue the more you study).

You can learn more about the specific eligibility requirements on our student loans page.

HECS-HELP is more commonly available to those studying an undergraduate degree than a postgraduate degree. Most postgraduate degrees will offer you the chance to apply for a FEE-HELP loan instead (more on this below).

How do you apply for a HECS loan?

You'll be given the option to apply for one when you enrol in your chosen course. All you need to do is submit an electronic Commonwealth Assistance Form (eCAF) to your education provider, by the census date.

If you’re studying through Open Universities Australia, we'll supply you with this form during your online enrolment and submit it to your university on your behalf. Otherwise, your university will be able to give you this form.

How much HECS can you borrow?

At the time of writing, in 2024, the maximum amount of HECS-HELP loan that most students can borrow is $121,844.

However, according to the government’s Study Assist page, if you are studying “medicine, dentistry and veterinary science courses leading to initial registration, or eligible aviation courses with census dates in 2024”, the current limit is $174,998.

When do you start paying HECS?

You start repaying your HECS-HELP loan through your tax once your annual income is over a certain amount. This threshold can change each year, so make sure you keep an ear out for any announcements from the government about this or check the Australian Taxation Office (ATO) website.

The amount you pay will be based on the income you earn. For example, if you earned an annual salary of $60,000, then the repayment amount that would be deducted from your tax for the year would be 1% of your income or $600.

Here are the current repayment rates for the 2024-2025 financial year.

You can use this HECS repayment calculator on the ATO website to get an estimate of your HECS repayment amount for the year.

Does your HECS earn interest?

No, you won’t have to pay any interest on your HECS-HELP loan in the way that you might with other kinds of loans, like many personal loans from the bank, for example.

The debt is indexed, though. This means the dollar amount you owe does tend to go up each year.

Learn more about making repayments in our other guide on how to pay off your HECS debt.

How and when is HECS indexed?

Indexation is when the amount of your loan is readjusted to keep pace with inflation in the economy. This is so the value of the loan stays the same over time. This happens on 1 June each year.

Until recently, the yearly indexation rate was decided by looking at the Consumer Price Index (CPI). This measures how much everyday goods and services cost.

In 2024, the government proposed changes to the way HECS is indexed. This was because inflation and cost of living increases were really high—meaning people’s debt amounts were jumping up heaps!

When these changes come into effect, HECS-HELP will be indexed based on whatever is lowest between the CPI or the Wage Price Index (WPI), which calculates how much wages have changed. This will keep the indexation rate at a reasonable level for university students.

You can read more about those changes and how they might affect you on the Department of Education website. For more info about how to pay off your HECS loan, see our other guide on the topic.

What’s the difference between HECS-HELP vs FEE-HELP?

HECS-HELP is a government loan that is offered to higher education students who are enrolled in a Commonwealth supported place (CSP). FEE-HELP is a similar loan that is offered to those in a full fee-paying place.

You will most likely be able to apply for a HECS-HELP loan if you’re studying an undergraduate degree, where CSPs are more common.

You will most likely be able to apply for a FEE-HELP loan if you’re studying a single subject or postgraduate degree, because these are typically full fee-paying courses.

Learn more about the different loan eligibility requirements on our student loans page.

How to find out more about HECS

Want to ask someone about HECS-HELP and your specific circumstances? That's what we're here for! 

Book a phone chat with a student advisor at Open Universities Australia.

We can give you clear and friendly advice about your eligibility for HECS, plus answer any questions you might have.  

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