The Australian Prudential Regulation Authority (APRA) has launched a consultation on targeted adjustments to how banks treat Higher Education Loan Program (HELP) debt repayments when assessing home loan applications, aiming to clarify expectations and promote more consistent practice across the sector. The proposals would remove HELP debts from debt-to-income reporting and clarify that banks may exempt a borrower’s HELP debt from serviceability assessments where the debt is expected to be repaid in the near term. APRA noted that while including HELP debts in serviceability assessments is generally appropriate, HELP obligations differ from most debts because repayments are determined by income rather than by debt size or interest rates. Subject to feedback, APRA expects to formally incorporate the final changes into its prudential framework in the second half of the year.
Australian Prudential Regulation Authority 2025-02-20
Australian Prudential Regulation Authority consults on easing banks’ treatment of HELP debts in home loan assessments
The Australian Prudential Regulation Authority (APRA) is consulting on proposed adjustments to the treatment of Higher Education Loan Program (HELP) debt in home loan applications. The changes would exclude HELP debts from debt-to-income reporting and allow banks to exempt these debts from serviceability assessments if repayment is imminent. APRA aims to clarify expectations and ensure consistent practices, acknowledging that HELP repayments are income-based rather than debt size-driven.