2026 rate: 2.8% Applied 1 June

HECS / HELP Debt Indexation (2026)

Indexation is the interest on your student loan — except it is not called interest, and it is not charged monthly. It is applied once a year, on 1 June, to the part of your loan unpaid for more than 11 months. For 2026 the rate is 2.8%.

How much will your debt grow?

Enter your balance. This projects indexation year by year using the rate you choose.

Your current loan balance

$

Indexation rate to assume 2026's actual rate is 2.8%. The 5-year average is 3.4%. Try 0.6% (the lowest on record) or 4% (the highest).

%

Project for how many years

Extra voluntary repayment each year Optional. Paid before 1 June so it reduces the balance indexation is charged on. Leave at 0 to see indexation alone.

$

Your projection

Indexation added over the period

$0

over 5 years

Starting balance: $0
Balance at the end: $0
Total added by indexation: $0
Your extra repayments: $0

Projection uses the ATO indexation method (1 June, lower of CPI or WPI). Future rates are unknown, so the rate you choose is an assumption. Checked 11 October 2026.

How indexation actually works

1. When it is charged

On 1 June every year, not monthly. That single date is what makes timing matter: a voluntary repayment made on 31 May reduces the balance indexation is charged on; the same payment on 2 June does not.

2. What it is charged on

Only the part of your loan that has been unpaid for more than 11 months. Money borrowed very recently is not indexed at the first opportunity.

3. How the rate is set

The lower of the Consumer Price Index (CPI) or the Wage Price Index (WPI). Since 2025 the ATO calculates it after the December CPI and WPI figures are released, using two years of ABS data.

4. What it is for

In the ATO's words, indexation “maintains the real value of the loan”. In practice it means your debt keeps pace with inflation and wages — so the amount you owe grows even in a year when you repay nothing.

The trap: indexation does not care what you earn. Below the repayment threshold your compulsory repayment is $0 — but the balance still grows. The ATO states that your loan will grow over time if you do not make compulsory or voluntary repayments.

Indexation rates, 2013 to 2026

The rate has ranged from 0.6% (2021) to 4% (2024, before the 2024 cap). The five-year average is 3.4%.

Year	Indexation rate	Notes
2026	2.8%	Current rate
2025	3.2%
2024	4%	previously 4.7%
2023	3.2%	previously 7.1%
2022	3.9%
2021	0.6%
2020	1.8%
2019	1.8%
2018	1.9%
2017	1.5%
2016	1.5%
2015	2.1%
2014	2.6%
2013	2%

Source: Australian Taxation Office — Study and training loan indexation rates, checked 11 October 2026.

Why 2023 and 2024 show two rates each

In 2024 the government changed how indexation is set and applied the change retrospectively:

Year	Originally applied	Reduced to	Difference on a $50,000 balance
2023	7.1%	3.2%	$1,950
2024	4.7%	4.0%	$350

If your balance was indexed at the higher rate in those years, the ATO issued a credit. That is why older calculators (and older blog posts) often quote 7.1% for 2023 — the number was real at the time, but it is no longer what was finally charged.

Frequently asked questions

What is the HECS indexation rate for 2026?

2.8%. That is the lowest rate since 2021. Indexation is applied on 1 June each year to the part of your loan that has been unpaid for more than 11 months.

How is indexation calculated?

The rate is the lower of the Consumer Price Index (CPI) or the Wage Price Index (WPI). From 2025 the ATO works it out after the December CPI and WPI figures are released, using Australian Bureau of Statistics data from the previous two years.

Why do some older years show two different rates?

Because of a 2024 law change. Indexation for 2023 and 2024 was originally applied at 7.1% and 4.7%. The government then legislated to cap indexation at the lower of CPI or WPI and applied it retrospectively, which reduced 2023 to 3.2% and 2024 to 4%. Credits were issued to affected accounts.

Can I avoid indexation?

You cannot switch it off, but you can reduce the balance it is charged on. Indexation is calculated on your balance as at 1 June, so a voluntary repayment made before that date reduces the amount the rate is applied to. Note that repayments made in the final part of the year may not be reflected immediately.

Does indexation apply if I earn under the repayment threshold?

Yes — this is the trap. Indexation is charged on your balance regardless of your income. If you earn below the minimum threshold you make no compulsory repayment, but the balance still grows each 1 June. The ATO states plainly that your loan will grow over time if you do not make compulsory or voluntary repayments.

What happens if indexation is higher than my repayment?

Your balance grows. Indexation is charged on the whole balance, while your repayment is set by your income. If the indexation amount is larger than your annual repayment, you are going backwards — the balance rises every year. There is a break-even point, which our repayment calculator works out for you.

Sources

Australian Taxation Office — Study and training loan indexation rates (checked 11 October 2026)
Australian Taxation Office — Study and training loan repayment thresholds and rates