Government makes it easier for young homebuyers to qualify for student loan debt relief
The Albanese government has instructed financial regulators to update lending guidelines for banks, specifically excluding student loan debt from serviceability assessments. This change aims to make it easier for Australians with Higher Education Loan Program (HELP) debt to secure home loans, as well as unlock more financing for unit construction. Treasurer Jim Chalmers emphasized the importance of treating people with HELP debt fairly when they want to buy a home.
Under the new plan, Australian Prudential Regulation Authority (APRA) will allow banks to exclude HELP repayments from serviceability assessments if borrowers are expected to repay their debt soon. Additionally, APRA will revise debt-to-income reporting rules to acknowledge the income-contingent nature of HELP debts.
The Australian Securities and Investments Commission (ASIC) will also amend its responsible lending guidance to ensure HELP debts are appropriately considered in lending assessments. The Australian Banking Association (ABA) welcomed these changes, stating that they provide much-needed clarity and could potentially increase access to credit for some Australians.
Despite the positive reception from banks, the policy faced criticism from the Opposition, with Deputy Leader Sussan Ley highlighting the ongoing housing crisis and cost of living struggles for young Australians. The Coalition has also opposed the government’s move to waive student debts, arguing against its fairness and cost implications.
