Unlock More Borrowing Power With New HECS-HELP Debt Rules
- Mortgage Insights
- Apr 9
- 3 min read
Updated: May 31
Recent changes by the Commonwealth Bank of Australia (CBA) to the way it assesses HECS-HELP debt are set to expand borrowing opportunities for Australians managing student debt.
These changes, implemented from 9 April 2025, mark a significant shift in the treatment of student debt within home loan applications and are already boosting the borrowing power of eligible customers by over 20 per cent.
Under CBA’s new policy, HECS debt that is expected to be fully repaid within the next 12 months is no longer considered in loan serviceability assessments. Additionally, for borrowers whose HECS debt is due to be repaid within the next five years, the bank has introduced a more favourable serviceability buffer of just 1 per cent.
This approach aligns with recent guidance from the Australian Prudential Regulation Authority (APRA) and follows updated regulatory recommendations from the Australian Securities and Investments Commission (ASIC) in March 2025.
These policy shifts have real, tangible benefits for borrowers. For example, an individual earning a gross annual income of $55,000 with no dependents previously had a maximum borrowing capacity of approximately $286,081.
With the new policy, this figure rises to $346,711, an increase of more than $60,000. Similarly, someone earning $80,000 annually now has access to an additional $80,468 in borrowing capacity, while those with a $100,000 salary gain an extra $105,667. The implementation of these changes is particularly beneficial for those looking to refinance existing mortgages, who currently make up around 44 per cent of all loan applications. Beyond supporting first-home buyers, these adjustments are expected to unlock opportunities for borrowers seeking finance for renovations, investments, or debt consolidation.
The positive impact of these changes has already been acknowledged by the finance broking community. Industry bodies, including the Finance Brokers Association of Australia (FBAA), have highlighted the importance of factoring in the time left to repay HECS-HELP debt rather than treating it the same as other forms of personal debt. They’ve also called on other lenders to adopt similar policies to ensure consistent and fair access to credit across the market.
From a practical standpoint, the changes cater to a growing number of Australians looking to enter the housing market despite carrying student debt. For example, a couple earning $70,000 each with HECS repayments concluding within 12 months now stands to borrow an additional $36,000 compared to previous assessments. For higher-income couples earning around $240,000 jointly, the potential increase in borrowing capacity could be as much as $187,000.
While not all lenders have adopted these changes yet, the move by a major bank like CBA signals a growing willingness within the industry to modernise lending practices and support a broader range of customers. The policy shift also aligns with the federal government’s broader push to address housing affordability and increase supply, as well as APRA’s ongoing review of lending standards for student debt.
As the market evolves, finance brokers are well-positioned to help clients navigate these changes and understand the opportunities they present. Whether for first-home buyers or existing borrowers looking to restructure their loans, the updated treatment of HECS-HELP debt represents a meaningful step towards fairer, more accessible lending.
Key Takeaway
CBA’s changes to the way HECS-HELP debt is assessed mean eligible borrowers can now access significantly higher borrowing power if their student debt is due to be repaid within the next five years. By removing HECS debt from loan calculations for those repaying it within 12 months and applying a lower 1 per cent serviceability buffer for those repaying within five years, these updates create real opportunities for first-home buyers, refinancers, and investors to enter or expand their presence in the property market.
Disclaimer: This article provides general information only and does not constitute financial, legal, or tax advice. It does not take into account your objectives, financial situation, or needs. Before acting on any information contained in this article, you should consider its appropriateness to your circumstances and seek professional advice from a licensed financial adviser or mortgage broker.
