5 Achievable Steps to Help Pay Off Your HECS Debt as a Student

How to pay off your HECS debt

With the whopping increase in HECS debts coming this year, here are 5 achievable ways to pay off your HECS debt as a student  

Australia has one of the best education systems in the world – but all of this is afforded at a price. 

The Australian Taxation Office (ATO) has released the country’s largest HELP/HECS debts; the highest recorded debt amounted to a huge $737 000

Why worry? 

These debts are set to rise even more,  by 7% on June 1 this year. This is all part of the process known as ‘indexation’, which alters the costs of HECS debts to keep up with inflation. 

Currently, the indexation rate is at 3.9%, as per June 2022. So, indexation is added on top of the total amount of a student’s repayments, thus increasing the length of time they have to pay it all off. 

In other words, the debtor currently owing $737 000 will have to pay approximately $760 000 if they don’t pay off some of their debt by June 1. If you want to know more about HECS, click here

If you’ve been on TikTok, you are bound to have stumbled upon #hecsdebt. Some finance experts recommend paying a chunk off your debt now, while other students claim not to worry about it. With all this noise, it can be confusing and overwhelming to know what to do next, and sitting around and waiting does not help put the mind at ease about the future.

Though it is obvious that the solution to spending is to ‘save’, it does not mean that you have to put your life on hold. After all, university is supposed to be fun, and your twenties are your best years.

Yes, ‘HECS’ and ‘fun’ can be said in the same sentence – it’s all about being smart and consistent. Of course, every student’s situation is different; income, spending habits and type of university degree all contribute to how much you need to be saving. 

So, if you’re here in search for a yes/no, ‘one-size-fits-all’ answer to the question – “should I pay off my HECS debt early”- you sadly won’t be getting one. But, by following these tips, you can take control of your HECS repayments and work towards a debt-free future. 

Here are 5 easy ways to start paying off your HECS. 

  1. Check your HECS debt immediately

Check how much you owe through the online ATO portal through myGov, or contact the ATO directly and provide them with your Tax File Number so that they can verify your details. While simple, people tend to overlook this step as it sets off their worries. 

It’s important to check this information as frequently as possible to make sure that you are across all your expenses and are aware of any deadlines that need to be met. Try not to freak out when you see the figure; think of it as giving yourself a headstart for future expenses.

  1. Use a HECS calculator to budget

Budgeting is always the first step to being savvy. Knowing where your money goes and visually seeing the total costs of things mean that you can start to prioritise your spending, line it up with your goals, and eliminate unnecessary expenses. There are numerous tools to help you budget, whether it be apps like YNAB, Goodbudget, your preferred bank app, or Excel. By budgeting, you can determine how much money you need to save to start etching your HECS debt away.   

One noble Redditor has created an open spreadsheet that can be accessed to calculate HECS debt when indexation rates are applied. The purpose of this tool is to help you decide whether or not it is a good idea to pay off debts early. You can find and make a copy of the calculator here

Budgeting means that you don’t need to stress about earning more money and saving every penny; it just means you can allocate your cash flow more efficiently. 

Use a HECS calculator to budget
  1. Use a budgeting system like the 50/30/20 rule

Starting to budget is often the hardest part, as people don’t really understand how to do it. The 50/30/20 rule is a structured formula that can help you organise your spending for the month. 

The formula states that you dedicate:

  • 50% for necessities (things that you absolutely must pay for survival like groceries and health care)
  • 30% for wants (optional expenses like dining out, coffee, gifts)
  • 20% for savings (safeguards and larger goals like an emergency fund or holiday).

Depending on your income and spending habits, HECS savings can go towards any of these categories, or you can create a whole new category solely for it. In short, decide what system is right for you. This is not to say that spending decisions will get easier, but the system will definitely help motivate you to make wiser spending choices.     

Make your university experience worthwhile
  1. Make your university experience worthwhile

Skipping classes, missing exams, and failing entire subjects come at a hefty price. If any of these scenarios come to reality, you’re likely to have to retake the whole subject and pay for it again. 

You can also reap the benefits of paying for university by making use of the facilities, such as the library and gym, or open days where clubs give away free goodies. Remember why you’re there and take advantage of it.

Independent financial planner, Claire Mackay emphasises that students should not worry about their student debt. She told The Australian, “it’s still a very cheap way of funding your future employment and income.” She suggests that students think of their education as an investment rather than a cost. “You’ve invested your time and your energy to develop your skill to set you up for your future income earning ability.” 

  1. Seek professional advice

If you’re really stuck and really anxious, don’t be afraid to reach for help, whether it be from a professional financial advisor, a parent, a graduate or a fellow student. Understanding their experiences and even mistakes with regards to HECS will put your personal circumstance into perspective. You’ll gain clarity as to whether or not you should contribute sums of money to your HECS debt now. 

Seek professional advice

For more innovative ways to save money, click here for simple ways to save money without really trying

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Janelle Porciuncula


Janelle is an ambitious writer who is constantly chasing the hottest topics in pop culture news. She loves spending quality time with her loved ones, eating out at new restaurants, listening to podcasts, sipping on matcha lattes and Moulin Rouge. She dreams of visiting France someday so that she can finally practise the language.

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