HECS-HELP loans went up by 3.9%. Is it still the best option for Aussie student loans?

21 June 2022

4 mins read

Applying for HECS/FEE-HELP? The price just went up.

What a 3.9% indexation hike means for prospective students

On June 1st, 2022, the HECS/FEE-HELP indexation rate went up by 3.9%. Last year, it went up by just 0.6%. The year before that? Only 1.8%.

So we’re dealing with a large price jump here, and if you’ve walked through a supermarket lately, rising costs are no surprise. But what really are indexation rates, and what do they mean for students considering taking on a HECS/FEE-HELP loan?

Let’s break it down.

What are indexation rates?

While you don’t technically pay interest on your HECS/FEE-HELP debts, you do pay a small percentage on top of your original loan every year. This amount is indexed to inflation, which is based on the Consumer Price index (CPI) — basically, how much things cost at the time.

HECS/FEE-HELP indexation rates typically go up by 2% or less each year, but just like everything else these days, the indexation rate on these loans is up significantly more this year thanks to inflation, which shot up to 5.1% in Q1 of 2022 in Australia — the highest rise in roughly 20 years, when GST was introduced to the country.

So how much will a HECS/FEE-HELP loan cost me?

Normally, indexation changes are small enough that they don’t make a huge difference to your repayments. But a 3.9% rise can make a pretty big difference to your monthly payout rate.

For example, if you take a $25,000 HECS loan after June 1st of this year, with a 3.9% indexation rate, you’re actually taking on $25,975 in debt.

The salary problem

The problem with HECS-HELP and FEE-HELP repayments is that they’re tied to your salary — the more you earn, the more you pay. And it’s not just a higher dollar amount; the percentage of your salary you’re required to pay out goes up as your salary does.

So if you earn $50,000 a year, you’ll only pay 1% of your pre-tax income towards your HECS/FEE-HELP debt every month (that’s $41.67, or dinner and a drink). But if you earn $135,000 a year, you’ll pay 9.5% of your monthly pre-tax income (that’s $1,068.75, or dinner and drinks for your whole class.)

Not ideal for career climbers. So what are the options for domestic students in Australia who need help with uni fees?

I’m thinking about enrolling in a course. Is HECS/FEE-HELP my best option?

If you’re thinking about applying for fee-help, know that there are options out there for you.

ZeeFi: The pay as you go student loan

ZeeFi is Australia’s only higher education-specific finance provider. Our Higher Education Loan is available for courses valued between $2,000 – $50,000, and allows you to pay fixed monthly repayments as you go. Plus, the interest charged on your loan is likely to be tax deductible if your course is work-related — unlike HECS costs. A ZeeFi loan is ideal for working students who are completing bachelor, post-graduate, and master’s degrees.

ZeeFi is the ideal option for students who:


Have already reached their HECS-HELP cap

If you’ve already had a HECS-HELP loan for previous studies, there’s a chance you might not qualify for more. ZeeFi is the ideal solution for returning students who have already reached their HECS/FEE-HELP caps, but still have higher education goals to reach.


Earn more than average wages

Unlike HECS/FEE-HELP, you don’t have to pay more when you earn more. Our payment terms are clear and fixed, providing you with confidence in your repayment amounts.

What’s the difference between HECS/FEE-HELP repayments and a ZeeFi loan? Say you have $25,000 in HECS/FEE-HELP debt from a 2-year course and take home a $135,000 salary. Before tax, you’re earning $11,250 per month. At this salary, your repayment rate is 9.5% of your pre-tax income, making your monthly repayment total $1,068.75 per month. If your salary goes up, or you’re given a bonus for the year, your repayment percentage rate goes up too.

Contrast this with ZeeFi: You take out a $25,000 loan with ZeeFi for a 2-year course. Your loan term is 5 years, with 4 drawdowns in total. Your estimated monthly payment due after your last drawdown is $685.67, which is fixed for the entire term of your loan. Changed jobs? Your monthly repayment won’t change. Got a raise? No change. Holiday bonus? No change.

ZeeFi makes sure there are no surprises on your monthly repayments across the entire term of your loan. You’re free to focus on your studies, without worrying about what your new future is costing you.


Would like to make additional repayments

We’ll never penalise you for paying down your loan faster. The more you pay down, the shorter your term becomes — and depending on your circumstances, the interest charged on your Higher Education loan might be tax deductible. Make repayments through our online portal, a fast and fully online process with no hidden fees.


Would like to borrow some or all of their course costs

When you take out a loan with ZeeFi, you’ll only repay the amounts drawn down. What does that mean? It means that if you stop your studies, for any reason, you’ll only ever pay for the course fees you’ve already used — and not the ones you didn’t. You also don’t need to take out a loan to cover your entire program. If you just need help with part of it, that’s fine by us.


Signing up for studies?

Talk to ZeeFi about your payment options. We’re passionate about helping students pursue their education goals, reach their full potential, and build a life they love.