How the marginal repayment system works
Until 2024-25, crossing the repayment threshold meant paying a percentage of your entire income — earning one extra dollar could cost you hundreds. That cliff is gone. Under the marginal system now in place, your compulsory repayment for 2026-27 is:
| Repayment income | You repay |
|---|---|
| Up to $69,528 | Nothing |
| $69,529 – $129,717 | 15c for every $1 over $69,528 |
| $129,718 – $186,050 | $9,028 + 17c for every $1 over $129,717 |
| $186,051 and over | Capped at 10% of your total repayment income |
For example, on $85,000 you repay 15% of the $15,472 above the threshold — about $2,321 — rather than the $4,000+ the old flat-percentage system would have taken.
"Repayment income" is bigger than taxable income
The thresholds apply to your repayment income: taxable income plus reportable super contributions (e.g. salary sacrifice), reportable fringe benefits, exempt foreign income and net investment losses added back. This catches people out — negative gearing reduces your taxable income but not your HECS repayment income.
Indexation: the 1 June number to watch
Your debt doesn't charge interest, but it's indexed every 1 June to the lower of CPI and the Wage Price Index — a change legislated after the 7.1% CPI spike of 2023 stung millions of borrowers. If your balance is small, consider whether a voluntary repayment before 1 June (after your employer's withholding is credited) is worth it; indexation applies to the balance on that date.
Employer withholding vs the real bill
Your employer withholds extra PAYG when you tick "I have a study loan" on your TFN declaration, but the actual repayment is only calculated when you lodge your tax return. If you have two jobs or fluctuating income, the withholding rarely matches the final figure — the projection above uses the real formula, not the withholding schedules.