Borrowing power just got better for Aussies with student debt.

NAB Lifts Student Debt Roadblock

From July 31, 2025, National Australia Bank (NAB) will no longer count HECS-HELP debts of $20,000 or less when assessing home loan applications. This change can significantly increase borrowing power—and help more Australians secure a mortgage faster. Source: Yahoo Finance Australia

CBA Led the Way Earlier This Year

Commonwealth Bank (CBA) was the first of the Big Four to ease student debt rules in April. It now:

• Removes HECS-HELP from assessments if the debt can be repaid within 12 months

• Applies a reduced serviceability buffer of 1% (instead of the usual 3%) for debts repayable within 1–5 years

Government and Regulators Driving Fairer Lending

These changes align with broader regulatory reforms initiated earlier in the year. In February, Treasurer Jim Chalmers urged APRA and ASIC to adopt a “common-sense” approach to HECS-HELP in lending guidelines—including clearer serviceability rules and debt-to-income calculations.

APRA has confirmed it will continue to maintain a 3% serviceability buffer, but made allowances for excluding HECS-HELP in near-term repayment scenarios.

What This Means for Borrowers

Borrowers with eligible HECS-HELP levels could see a noticeable boost in borrowing power—sometimes tens of thousands of dollars. The Finance Brokers Association (FBAA) and advocates welcome the changes, calling on other lenders to follow suit.

However, these changes may not benefit those with larger or long-dated HECS debts—qualification depends on timing and lender discretion. NAB emphasized that while these updates help borrowers, broader solutions are needed—especially around housing supply.

Reference
Original article: “NAB joins Commonwealth Bank in major HECS change for home loan borrowers: ‘Sooner’”, Yahoo Finance Australia.

Disclaimer
This blog post is provided for general information only and should not be relied upon as financial or legal advice. Lending assessments vary by individual circumstances and lender criteria. Readers are encouraged to seek independent professional advice tailored to their specific situation before making decisions.