Is It Worth Paying Off Your HECS Debt Early? (Our Straightforward Take)
If you're tossing up whether to use your savings to pay off your HECS-HELP debt early, here’s our honest, no-nonsense answer:
For most people, it’s not worth it.
Here’s why.
HECS-HELP: A Debt That Doesn’t Bite
HECS-HELP isn’t like a credit card or personal loan. There’s no interest. It’s only indexed to inflation (CPI) each year — and from 1 July 2025, it’ll be capped at the lower of CPI or Wage Growth. That makes it even more manageable.
You only start making repayments once you earn over $54,435 (for 2024–25), and those repayments are gradual, starting at just 1% of your income.
In other words, HECS is:
Low-cost
Flexible
Not urgent
Why Holding Onto Your Savings Is Smarter
When it comes to building a strong financial foundation, your savings can work much harder for you elsewhere:
Emergency Buffer: Life happens. Keeping cash on hand keeps you protected.
Investing: Growing your money in the right places usually beats the minimal HECS indexation rate.
Property Goals: Saving for a home deposit or paying down a mortgage often gets you further, faster.
Cash equals choice. Paying off HECS doesn’t.
When It Could Make Sense
There are only a couple of scenarios where paying off HECS early might be worth a chat:
You’re nearing retirement, with little taxable income ahead.
You’re applying for a home loan, and your HECS balance is holding back your borrowing capacity — and you’ve already got your deposit sorted.
Even then, it’s worth weighing up if that money could be better used to strengthen your deposit or avoid LMI (Lenders Mortgage Insurance).
Big Picture Thinking
At Zion Financial, we always encourage you to think long-term. Shrinking the cheapest debt you’ve got isn’t the path to wealth. Growing your assets, staying liquid, and making smart moves is.
Our final word:
Protect your savings.
Let your HECS do its thing quietly in the background.
Focus on building the future you want.
About Zion Financial
At Zion Financial, we're here to help you make confident, well-informed decisions. Whether you're juggling HECS, planning your first home, or thinking about your financial future, we're ready to guide you every step of the way. Zion Financial is based on the Sunshine Coast in Mooloolaba, Queensland Australia. We serve clients Australia wide.
Reach out to Zion Financial for a chat today.
Disclaimer: This article provides general information and does not consider your personal objectives, financial situation, or needs. You should seek advice from a licensed financial adviser before making any financial decisions.
