Single mothers are raising concerns that HECS-HELP student loan debt is becoming a major obstacle to achieving home ownership, with many saying the repayments significantly reduce the amount they can borrow from banks despite having stable employment and reliable incomes.
Several women told 9News they had spent years studying to improve their career prospects and financial security, only to discover that their education debt was limiting their ability to qualify for a mortgage. Although HECS-HELP loans do not require upfront repayments and generally carry no traditional interest, compulsory repayments begin once a person's income reaches a government-set threshold. Financial institutions take these repayments into account when calculating how much a borrower can afford.
For single parents, who often rely on a single income while covering childcare, rent, household expenses and everyday living costs, the additional impact of HECS repayments can substantially reduce borrowing capacity. Some said they were approved for loans tens of thousands of dollars lower than expected because lenders considered their education debt alongside other financial commitments.
Housing affordability remains one of Australia's biggest economic challenges, with rising property prices and higher interest rates making it increasingly difficult for first-home buyers to enter the market. Advocacy groups argue that single mothers are among the groups most affected because they generally have lower household incomes and fewer financial resources than dual-income families.
Financial experts note that banks are required to assess a borrower's ability to meet all ongoing financial obligations. Since HECS-HELP repayments reduce disposable income, lenders include them in serviceability calculations even though the debt differs from traditional personal loans or credit card debt.
The issue has gained renewed attention following recent federal government reforms aimed at easing student debt. The government has announced measures to reduce outstanding HECS balances and change the way indexation is calculated, providing relief to millions of Australians with student loans. While these reforms lower overall debt levels for many borrowers, they do not eliminate the impact that compulsory repayments can have during mortgage assessments.
Housing advocates argue that further reforms may be needed to ensure education debt does not create unintended barriers for people trying to purchase their first home. Some have suggested lenders and policymakers should review how HECS obligations are treated, particularly for essential workers and single parents who have invested in higher education to improve their earning potential.
Banking experts, however, maintain that responsible lending laws require all regular financial commitments to be considered when determining borrowing capacity. They say assessing HECS repayments helps ensure borrowers can comfortably manage mortgage repayments without experiencing financial stress.
For many single mothers, the challenge highlights the difficult balance between investing in education and achieving long-term financial goals such as home ownership. While government reforms are expected to reduce student debt over time, many believe broader changes to housing affordability and lending assessments will be needed before the barriers they face are significantly reduced.
