Rules changed June 2025 Sourced from APRA, NAB and Aussie
Does HECS / HELP Debt Affect Your Borrowing Power?
Short answer: it can, but less than most people think — and the rule changed in mid-2025. Your HECS debt is not treated like a credit card or a personal loan. What lenders look at is your compulsory repayment, because it reduces the income you have available to service a mortgage.
What APRA changed, in its own words
In February 2025 APRA began consulting on how banks treat HELP debt. On 19 June 2025 it finalised two targeted changes. Its media release explained the reasoning:
“APRA also acknowledges that HELP debts are different to most other debt obligations because a borrower’s repayment obligations are determined by their income and not by the size of their debt or interest rates.”
APRA media release, 20 February 2025
The two targeted adjustments APRA finalised were:
- Removing HELP debts from debt-to-income reporting
- Clarifying that banks may exempt an applicant’s HELP debt from the serviceability assessment where the borrower is expected to pay it off in the near term
APRA Member Therese McCarthy Hockey said the changes “should support a more consistent approach across the sector… They may also help make it a little easier for some borrowers with HELP debts to purchase homes at an earlier time.”
So how does a HECS debt actually reduce borrowing power?
Not through the balance. Through the repayment. As NAB puts it:
“Even though HECS isn’t a traditional loan with monthly bills, the compulsory repayments reduce your net disposable income (usable income), lowering your borrowing power.”
NAB — Does HECS affect your home loan application?
When a lender calculates what you can afford, it works from your income after tax and after existing commitments. Your HECS repayment sits in that second bucket — it is money that never reaches your bank account.
| Characteristic | HECS / HELP debt | Credit card or personal loan |
|---|---|---|
| Interest | None — indexation only | Charged, compounding |
| Who sets the repayment | Your income | The lender, as a minimum |
| If your income falls | Repayment falls, possibly to zero | Minimum repayment still due |
| Stress-tested for rate rises | Not applicable — no interest rate | Yes |
| Counted in debt-to-income reporting | No (removed June 2025) | Yes |
Sources: APRA media releases and consultation page (Feb & June 2025); NAB guidance on HECS and home loans. Checked 11 October 2026.
What does the repayment do to the income a lender sees?
Enter your income to see the compulsory repayment that a lender would treat as already committed.
What a lender sees
Income already committed to HECS
$0
per year
- Your income
- $0
- Less compulsory repayment
- $0
- Income available for a mortgage
- $0
- Weekly effect
- $0
This is not a borrowing-power calculator. It shows the direct, measurable effect of the compulsory repayment on your assessable income. A lender’s actual decision depends on your deposit, expenses, other debts, credit history and its own policy.
Lender policies differ — here is what one major bank does
APRA sets the framework; each bank writes its own rules. NAB published its position when the changes came in:
NAB — from 31 July 2025:
- If your student debt is $20,000 or less, it will not affect how much NAB will lend you.
- NAB said this could see “a boost in their borrowing power” for affected customers.
Source: NAB media release, published 24 July 2025, updated 4 August 2025.
Other lenders have their own thresholds, and some have none. Aussie summarises the practical position this way: “Lenders may consider compulsory HELP repayments alongside your income, expenses and other debts. Lender policies can differ.”
If it matters to your application, ask the lender directly. Rules vary by lender, by product and by how your application is assessed — and they change. This page explains the framework, not what any particular bank will decide.
Two things worth checking on your own account
Your actual balance
Lenders work from your actual debt, so check yours in your ATO online account rather than estimating. Broker guidance has noted that eligible HELP balances were reduced by 20% in 2025, applied automatically to balances as at 1 June 2025 — but your own account is the only place to confirm what yours is.
Reported by Aussie (published 10 September 2026). We have not independently verified this figure against a government source — check your ATO account.
Your repayment, not your balance
The number that affects your borrowing power is the compulsory repayment, and since 2026–27 it only starts above $69,528. A large balance with a modest income can mean a small repayment — while a small balance with a high income can mean a larger one. The balance size is not what drives the assessment.
Frequently asked questions
Does HECS debt affect how much I can borrow?
It can, but less than most people assume — and the rules changed in 2025. HECS is not treated like a credit card or personal loan. What lenders look at is your compulsory repayment, because it reduces the income you have available for a mortgage. Under the current marginal system a repayment only starts above $69,528, so many borrowers are affected only slightly, or not at all.
What changed in 2025?
In February 2025 APRA consulted on how banks should treat HELP debts, and finalised the changes on 19 June 2025. The two adjustments were: removing HELP debts from debt-to-income reporting, and clarifying that banks may exempt an applicant’s HELP debt from the serviceability assessment where the borrower is expected to pay it off in the near term.
Do all lenders treat HECS the same way?
No. APRA sets the framework, but each lender applies its own policy. NAB, for example, announced that from 31 July 2025 a student debt of $20,000 or less would not affect how much it will lend. Other banks have their own thresholds and rules. If the answer matters to your application, ask the specific lender.
Is HECS debt on my credit file?
It is not reported the way a default or a credit card is. APRA specifically removed HELP debts from debt-to-income reporting. Lenders do become aware of your HECS-HELP debt through the information you provide and other disclosure channels, and they assess the compulsory repayment as part of your overall position.
Why is HECS different from other debt?
In APRA’s words: a borrower’s repayment obligations are determined by their income, not by the size of the debt or by interest rates. There is no interest rate to stress-test, no minimum card repayment, and the debt does not grow when your income falls (indexation applies regardless, but the balance does not compound like compounding interest). That is why it is not treated like ordinary consumer debt.
Should I pay off my HECS before applying for a home loan?
Sometimes, but not automatically. Paying it off removes a compulsory repayment from your assessable income, which can lift your borrowing power — but it also empties the cash you would otherwise use for a deposit, and lenders assess your savings and deposit separately. Run the numbers both ways, and speak to a broker or lender about your situation. Voluntary repayments made before 1 June also reduce the balance indexation is charged on.
How accurate is the estimate on this page?
It shows the direct effect of your compulsory repayment on your assessable income — the part lenders can see. It is not a borrowing-power calculator, because that depends on the lender, your deposit, expenses, other debts and credit history. Treat it as one input, not the answer.
Related
- HECS / HELP repayment calculator — work out your compulsory repayment
- HECS debt indexation — how your balance grows each 1 June
- HECS repayment thresholds — every year’s bands
Sources
Every substantive claim on this page is attributed to one of these. Where a figure could not be verified against a primary government source, we say so on the page.
- APRA (Australian Prudential Regulation Authority) — APRA proposes updated approach to treatment of HELP debts (finalised 19 June 2025; consulted February 2025)
- APRA (Australian Prudential Regulation Authority) — Clarifying the treatment of HELP debt obligations (consultation page, includes APG 223 and ARS 223.0)
- NAB — Does HECS affect your home loan application? — nab.com.au (11 October 2026)
- NAB — new HELP debt assessment (media release) — nab.com.au (published 24 July 2025, updated 4 August 2025)
- Aussie — HECS/HELP changes and borrowing power — aussie.com.au (published 10 September 2026)
This page is general information, not credit, financial or tax advice. Lender policies change; confirm the current position with your lender or broker before acting.