Indexation is applied on 1 June each year. Here are the rates on record, and what each one added to a debt of each size in that single year.
| 1 June | Rate | On $10,000 | On $25,000 | On $40,000 | On $60,000 |
|---|---|---|---|---|---|
| 2021 | 0.6% | $60 | $150 | $240 | $360 |
| 2022 | 3.9% | $390 | $975 | $1,560 | $2,340 |
| 2023 | 3.2% | $320 | $800 | $1,280 | $1,920 |
| 2024 | 4.0% | $400 | $1,000 | $1,600 | $2,400 |
| 2025 | 3.2% | $320 | $800 | $1,280 | $1,920 |
| 2026 | 2.8% | $280 | $700 | $1,120 | $1,680 |
HECS indexation rate applied on 1 June each year. 2024 was the peak at 4.0%.
Indexation compounds — each year's rate applies to the balance the previous year's indexation left behind. For a debt that was never repaid, the six events from 2021 to 2026 come to a cumulative 19.0%:
| Debt in 2020 | Balance after 2026 indexation | Added by indexation | Total growth |
|---|---|---|---|
| $10,000 | $11,901 | $1,901 | 19.0% |
| $25,000 | $29,754 | $4,754 | 19.0% |
| $40,000 | $47,606 | $7,606 | 19.0% |
| $60,000 | $71,409 | $11,409 | 19.0% |
Illustrative: assumes no repayments at all. A real balance would be lower, because compulsory repayments reduce it each year — see the payoff grid.
The tables above index the whole balance every year, which is the right way to show the effect of the rates. Your own account works slightly differently in one respect: indexation only applies to the part of your debt that has been outstanding for more than 11 months.
That matters in two situations. If you have recently taken on new study debt, the fresh amount escapes the next 1 June. And if you made a voluntary payment during the year, the balance you knocked off is not there to be indexed — which is the whole reason the timing of a voluntary payment matters so much more than the size of it.
It also explains a complaint that comes up every June. Your balance rises on 1 June even though money has been coming out of every pay, because compulsory repayments are not credited until your return is assessed weeks later. Indexation goes on first, the repayment comes off second. The full order of events is here.
The rates history is the input to the only genuinely financial decision HECS presents: whether to put spare money into the debt or somewhere else.
Because indexation is not interest and there is no penalty for taking your time, the question is purely one of comparison. A voluntary payment "earns" you the indexation rate, guaranteed and tax-free — 2.8% this year. Any alternative use of the money has to beat that after tax to be worth choosing.
Two features of the table make this less obvious than it sounds. First, the rate moves every year, so a decision that was clearly right in 2024 at 4.0% may be marginal at 2.8%. Second, the return is guaranteed, and a guaranteed 2.8% is not the same thing as a hoped-for 4.8% — risk is part of the comparison, not a footnote to it.
There is also a timing lever that costs nothing: paying before 1 June rather than after moves a full year of indexation off the amount you pay. Same money, same debt, one date. The full comparison, including the invest-instead path, is here.
The 2023 cap changed the picture. From 1 June 2023 indexation is the lower of CPI and WPI rather than CPI alone. In the high-inflation years that followed, that cap is the difference between the rates you see above and considerably higher ones.
The recent trend is down. 2024 peaked at 4.0%; 2026 came in at 2.8%. That matters for the pay-early-or-invest decision, because the case for paying extra is strongest when indexation is high relative to what you could earn on the money — we compare both paths here.
A voluntary payment made before 1 June reduces the balance that gets indexed that year. At 2.8%, paying $5,000 in May saves $140 of indexation.
Every figure on this page is computed at build time by the same engine that powers the calculators on this site — nothing is typed in by hand, so the tables cannot drift away from the tools. The engine is checked against the ATO's published thresholds by a golden test suite that fails the build if any figure moves unexpectedly.