The HECS mistakes costing students thousands

A university degree can be the key to a better career, but for millions of Australians, it also comes with a financial catch that can last for decades.

In 2026, around 270,000 Australians started university for the first time.

For many, that also means taking on a HECS-HELP debt, joining more than 3 million Australians already carrying student loans.

And while HECS can make uni more affordable upfront, the debt can linger long after graduation, potentially affecting borrowing power, savings goals and plans to buy a first home.

What is a HECS-HELP debt?

For many Australians, HECS-HELP makes university possible without paying tuition fees upfront.

Most students are enrolled in a Commonwealth-supported place, where the government pays part of the cost of a degree. The remaining amount can either be paid upfront or deferred through a HECS-HELP loan.

Unlike a credit card or personal loan, HECS doesn't charge interest. But the debt still grows over time through annual indexation linked to inflation or wages growth. In 2026, the indexation rate is 2.8%.

Repayments also don't start immediately. Graduates only begin repaying their debt once their income reaches $67,000.

At first glance, HECS can seem manageable.

But the long-term impact can catch many graduates off guard.

Some Australians carry student debt for decades, and banks still factor HECS repayments into home loan applications, which can reduce borrowing power.

That's why the financial decisions students make during university can have a major impact long after graduation.

Seven ways to reduce your HECS debt

Small mistakes at university can become expensive later. Here are seven ways students can keep their HECS debt under control.

1. Paying early can reduce indexation

Although voluntary repayment discounts no longer exist, paying down your HECS balance early can still reduce the amount added through annual indexation.

If you plan to make a voluntary repayment, do it well before June 1, when indexation is applied.

The ATO recommends allowing at least four business days for payments to process. Miss the deadline and indexation may still be added to your balance.

HECS saver tip: Even small voluntary repayments can reduce future indexation costs.

2. Dropping subjects late can be expensive

If you plan to quit a course or subject, do it before the census date.

This is usually the last day you can withdraw without incurring a HECS debt for the subject.

Each university sets its own census dates, so check your uni calendar carefully.

HECS saver tip: Missing the census date could mean paying for a subject you no longer study.

3. Switching degrees can increase your debt

Many students realise during first year that they have chosen the wrong course.

Switching degrees or universities is common, but it can come at a cost.

HECS fees vary significantly between universities and study areas, especially in courses such as medicine, dentistry and veterinary science.

Study medicine at the University of NSW, for example, and the 2026 indicative full fee to complete the degree is about $78,000.

HECS saver tip: Compare course fees before transferring universities or degrees.

4. Failed subjects can cost twice as much

Failing a subject doesn't just hurt academically. It can also become expensive.

If you need to repeat the subject, you'll generally pay another round of HECS fees.

If you're struggling, speak with tutors, lecturers or student support advisers early. Failed subjects can also remain on your academic transcript.

HECS saver tip: Seeking academic support early could save thousands in repeat fees.

5. Extra tax withholding can help

If you're earning decent money while studying or after graduation, letting your employer know about your HECS debt can help avoid a surprise tax bill.

Once your income passes the repayment threshold, employers can withhold additional tax payments to help cover compulsory HECS repayments.

Just remember to notify your employer once the debt is fully repaid.

HECS saver tip: Letting your employer withhold extra tax during the year could help you avoid a large EOFY tax bill.

6. Keep track of your balance

Regularly checking your HECS debt can help ensure repayments are being correctly recorded.

Students can review their balance through myGov and the ATO.

Keeping an eye on your debt early can help avoid bigger financial surprises later.

HECS saver tip: Regularly checking your HECS balance can help you spot missing repayments or unexpected indexation early.

7. Know your HELP loan limit

There is a cap on how much students can borrow through the HELP system.

For 2026, the loan limit for most students is $129,883.

Students studying medicine, dentistry, veterinary science and eligible aviation courses can access a higher limit of $186,544.

Go over the limit and you may need to pay fees upfront to continue studying, potentially adding even more financial pressure.

HECS saver tip: Keeping an eye on your HELP balance could help you avoid reaching the borrowing cap before finishing your degree.

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