Read the latest

Access insights and articles to help you navigate the world of education and investments.

HECS debt and HELP debt: the good and the bad

Australians are fortunate to have the HECS-HELP system as a pathway to tertiary education. But it’s not free money, and recipients need to consider how to manage repayments to avoid negative financial impacts… particularly in times of high inflation.


What are the impacts of the debt?


Futurity Investment Group’s Financial and Social Impact of the Cost of University Education Report, which surveyed more than 1,000 Australians who attended university, found owing HECS-HELP can impact major life events, including buying a home, getting married and starting a family.


The positive impact is obvious: fair access to higher education. The negative impact becomes clear when you consider the debt, while accessible and interest-free, is still a financial burden.


According to Australian Taxation Office data, more than three million people have a HECS debt or HELP debt, totalling $74.3 billion.

What is HECS-HELP?

The Australia Government provides loans to pay for approved higher education courses. The loans are interest-free, but the debt is indexed annually by the Consumer Price Index (CPI). HECS repayments and HELP repayments kick in when the recipient’s income reaches a certain level, and the repayment rate increases as the income grows.


Indexation: inflation’s effect on HECS-HELP loans

The loans are subject to indexation, which means they increase in line with inflation. At times like now, when wages are not growing at the same rate as inflation, the loan balance could grow larger year by year, even though the recipient is making repayments.


According to 2022 federal budget papers, inflation has piled more than $1.9 billion of extra debt onto students in 2022. That's expected to jump another $1.6 billion in 2023.

The impact of HECS debt and HELP debt

A growing debt

The report reveals that while the average HECS-HELP balance is on the rise, so is the average amount of time it takes to pay it off.

  • The average balance is now $22,636, which has jumped 10% in the past two years.

  • The average time to fully repay the debt is now 9.5 years. It has gradually trended up from 7.5 years over the past 15 years.

  • The majority (61%) of respondents aged 22-29 finish university with a debt of between $20,000 – $50,000, an increase of 13% since 2020.


A weight that can be hard to shake


Depending on when it’s incurred and how much the recipient earns in the years to come, owing HECS

HELP can leave long-lasting financial burden. Respondents revealed:

  • 60% aged 22-29 currently have a debt of more than $20,000.

  • 51% aged 40-49 still have a debt, with the majority still owing more than $20,000.


Making dreams harder to achieve

The report found HECS-HELP can have a real impact on the outcomes many Australians strive for. Of the


  • 59% reported the debt has had some impact on buying a home.

  • 49% reported the debt has had some impact on their ability to purchase a car.

  • 33% reported the debt has had a moderate to very large impact on their ability to start a business.


Financial stress 

As with any debt, looming HECS repayments or HELP repayments can bring financial stress. The report


  • 72% of female respondents and 63% of male respondents are uncomfortable with their level of outstanding debt.

  • 60% of female respondents and 50% of male respondents reported their financial situation is often a source of worry.

  • 20% of male respondents and 14% of female respondents are unable to afford medical and dental treatments due to the impact of their outstanding debt.


How can you lessen the load?

Generations Z and Alpha face a future of lifelong learning, working longer into their lives than previous generations, most likely in multiple careers. With both the cost of education and general inflation increasing, the negative impact of indexed debt could be heightened.


Parents and grandparents can help ease the path for their loved ones and help them meet their lifelong learning aspirations by planning for the cost of education. Bearing in mind the cost of education carries on well after high school, they might consider long-term investing.


We can help

With Futurity’s range of Education Bonds, parents and grandparents can tax-effectively save and invest to help cover the cost of university and beyond.


Our dedicated education savings and investment vehicles can alleviate the financial and social burden associated with managing HECS repayments or HELP repayments, while also enabling young people to upskill, learn new technologies and explore different career paths.


To find out more, speak with your Financial Adviser about Futurity’s Education Bond range or get in touch with us.