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The regulator has responded to calls from the Treasurer and changed its guidance in an effort to make it easier for those with student debt to get a home loan.
The Australian Securities and Investments Commission (ASIC) has updated its guidelines on student debt, saying that lenders can be more flexible compared to when treating other consumer debts.
Last month, federal Treasurer Jim Chalmers urged regulators to make it easier for borrowers with student debt to take out a mortgage.
In response, ASIC has changed its guidance to lenders, updating the Regulatory Guide 209 Credit licensing: Responsible lending conduct (RG 209) with two more paragraphs and additional guidance on the treatment of Higher Education Loan Program (HELP) debt.
The updated guidance said that HELP debt is different from other debt because whether a consumer needs to start repaying the loan and the amount that is repaid are both contingent on the consumer’s income.
Student loans may therefore be considered differently by a lender from other consumer debts.
The new guidance also said that lenders may “choose to consider the circumstances of the consumer’s outstanding HELP debt”.
The regulator said that, after lenders took into account the remaining HELP debt owed, expected repayment time, and the anticipated proposed loan’s term, a lender may ignore student debt when calculating outgoings.
Previous responsible lending rules required lenders to assess student debt in the same way as they would any other debt, such as credit card debt or a personal loan.
That was despite student debt not needing to be repaid if the holder was unemployed or making less than $54,435 in 2024–25 or $67,000 in 2025–26.
However, brokers frequently said that this interpretation created another barrier for first home buyers as the debt drastically reduced serviceability.
After Chalmers wrote to ASIC and the Australian Prudential Regulation Authority (APRA), the latter wrote to banks for feedback on proposed changes to student debt repayments.
Subject to feedback, APRA expects the final changes to be formally incorporated into APRA’s prudential framework in the second half of the year, with authorised deposit-taking institutions (ADIs) meeting the updated reporting requirements for the September 2025 quarter reporting period.
[Related: Major changes to HECS home loan rules]
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