HECS HELP Student Debt: Should You Pay It Off or Invest Instead?

By Molly Benjamin, Founder of Ladies Finance Club

Listen to the full podcast here.

Understanding the Impact of HECS on Your Financial Future

If you’ve ever wondered whether you should prioritise paying off your HECS-HELP student debt or use that money to invest, you’re not alone. In this episode of Get Rich, Molly chats with financial adviser Jess Brady, founder of The Greenhouse, to unpack everything you need to know, from how indexation works to whether your HECS debt could impact your chances of buying a property.

Whether you're earning just above the repayment threshold or working towards your first home, this episode covers the pros and cons of different strategies and how HECS fits into your broader financial plan.

What Is HECS-HELP and How Does It Work?

HECS-HELP is a government loan scheme that helps eligible students pay their university fees. If you didn’t pay upfront, chances are you’ve got student debt accruing in the background.

The catch? Indexation. Although it’s not "interest" in the traditional sense, your HECS debt is adjusted annually based on inflation, which can significantly increase your balance over time.

Understanding Indexation and Repayment Thresholds

As of January 2025, if you earn under $54,400, you're not required to make repayments. However, indexation still applies, which means your student debt could be growing even if you’re not paying it down.

New changes mean your debt will now be indexed by the lower of the Consumer Price Index (CPI) or Wage Price Index (WPI) but that doesn’t necessarily mean you’re in the clear.

Pro tip: Use the ATO’s calculator to see how much your indexed debt is increasing each year.

Should You Prioritise Paying Off HECS or Start Investing?

Jess breaks it down: if you’re earning around $65,000 and only repaying 2% of your income, but indexation is sitting at 3% or higher, your balance is actually growing.

So, should you redirect extra cash towards your student loan? Maybe. But only if:

• You have an emergency fund
• You’re not drowning in high-interest debt (like credit cards)
• You’ve weighed up the opportunity cost of not investing that money

For many, starting to invest can generate better long-term returns (typically 7–10%) compared to indexation rates, especially now that the CPI/WPI model softens the blow.

HECS and Buying Property: What You Need to Know

If you’re thinking about buying your first home, HECS debt can absolutely impact how much a bank is willing to lend you.

Jess explains:

• Your HECS repayments reduce your borrowing capacity.
• If you have a guarantor, you might still be able to borrow more.
• Consider whether a larger deposit or a lower debt load gives you the better outcome.

This is where financial advice and scenario testing with a mortgage broker really comes in handy.

Budgeting and Planning: Finding the Right Balance

Jess suggests using high-interest savings accounts and automation to manage your repayments wisely especially if you're not sure whether to pay down your HECS balance or invest.

And remember, this is personal finance. It’s not one-size-fits-all. The best strategy depends on your goals, income, lifestyle and risk tolerance.

You might:

• Split your money between investing and HECS repayments
• Boost your super as a long-term goal
• Focus on clearing bad debt first

Whatever your path, make sure it reflects your financial priorities and values.

There’s no silver bullet, but being proactive is key. Whether it’s consolidating your debt, automating your budgeting, or starting an ETF investment portfolio, there’s power in making informed choices.

So if you’ve been ignoring your HECS balance or feel unsure where to start—take a breath. This episode is a great place to begin understanding how student debt affects your financial trajectory.

🎧 Tune in to "HECS HELP Student Debt: Should You Pay It Off or Invest Instead?" now and start planning your next smart money move!