How HECS Indexation Works
Understanding how your debt grows each year — and the reforms that protect you.
Updated: July 2025 · Based on ATO legislation
What is indexation?
HECS-HELP debts don't charge interest, but they are indexed each year on 1 June to maintain their real value. This means your debt balance increases annually based on inflation measures.
Until 2023, indexation was based purely on the Consumer Price Index (CPI). When CPI spiked to 7.1% in 2023, millions of borrowers saw their debts jump significantly. In response, the government introduced a cap.
The CPI vs WPI cap reform
From 2023 onwards, HECS indexation is capped at the lower of CPI or the Wage Price Index (WPI). This means your debt can never grow faster than wages, providing a meaningful safety net during high-inflation periods. The reform was applied retrospectively to 1 June 2023.
Historical indexation rates
| Year | Rate | Method |
|---|---|---|
| 2016 | 1.5% | CPI |
| 2017 | 1.5% | CPI |
| 2018 | 1.9% | CPI |
| 2019 | 1.8% | CPI |
| 2020 | 1.8% | CPI |
| 2021 | 0.6% | CPI |
| 2022 | 3.9% | CPI |
| 2023 | 7.1% | CPI |
| 2024 | 4.7% | CPI/WPI cap |
| 2025 | 3.2% | CPI/WPI cap (est.) |
Indexation impact calculator
After 10 years: $42,318
That's $12,318 in indexation alone
If you're looking for ways to optimise your finances alongside your HECS debt, consider salary sacrifice into super — it reduces your income tax without affecting your HECS repayment income.