Higher Education Loan Repayment Threshold Lowered Under New Act

Monday 3 September 2018 @ 2.54 p.m. | Legal Research

The Higher Education Support Legislation Amendment (Student Loan Sustainability) Act 2018 (CTH) has been assented to on 24 August 2018. The Act is aimed at improving the sustainability of the Higher Education Loan Program (HELP) and debt recovery of the Student Financial Supplement Scheme (SFSS) by making changes such as lowering the threshold for repayment and introducing a new combined loan limit.

Background to the Act

HELP is an income contingent loan program for the purpose of assisting higher education students in Australia with paying for their education. Reforms were suggested in the Government’s higher education package announced in December 2017 as part of the Mid-Year Economic and Fiscal Outlook. The Bill for this Act was originally introduced by former Assistant Minister for Vocational Education and Skills and current Minister for Industry, Science and Technology Karen  Andrews, and following its introduction was referred to the Senate Education and Employment Legislation Committee.

Main Amendments

The Act amends the Higher Education Support Act 2003 (CTH), the Social Security Act 1991 (CTH), the Student Assistance Act 1973 (CTH), the Trade Support Loans Act 2014 (CTH) and the VET Student Loans Act 2016 (CTH). The amendments have the following impacts:

  • New repayment thresholds will be imposed from 1 July 2018, starting with a minimum repayment threshold of $45,000.
  • The indexation of the HELP payment thresholds will be aligned to the Consumer Price Index (CPI). Previously these were aligned to the Average Weekly Earnings (AWE).
  • A new combined loan limit will be introduced from 1 January 2019.This will limit how much students can borrow under HELP. The combined limit is $150,000 for students who study medicine, dentistry and veterinary science,. The limit is $104,440 for all other courses.
  • Repayment thresholds managed by the Social Services portfolio will be aligned with HELP repayment thresholds from 2019-20.

Response to Act

In a media release issued by the Media Centre for the Department of Education and Training, former Minister for Education and Training and current Deputy Leader of the Government in the Senate and Minister for Trade, Tourism and Investment Simon Birmingham stated:

‘Under the changes, a student loan will still be one of the cheapest loans Australians can access and students still won’t have to pay a cent up-front. We’re also tackling record levels of student debt, which currently stands at a staggering $54 billion. Left unchecked these costs would spiral out of control and mean a quarter may never be repaid. With the average graduate starting salary around $60,000, Australian taxpayers rightly expect students to start repaying their loans proportionate to their incomes. Our plan means those repayments start at just $8 or $9 a week. By making loans replenishable we’re also rewarding borrowers who make repayments towards their HELP debt and ensuring students have the flexibility to return to study in order to retrain, change careers, or further specialise in their current profession.’

Former Assistant Minister for Vocational Education and Skills and current Minister for Industry, Science and Technology Karen Andrews also stated in the media release that the 25 per cent loan fee for private university students would be abolished.

Nationals Senator Steve Martin voted against the Bill, and was reported by ABC Triple J as stating:

‘It is my concern that any reduction to the HECS-HELP repayment threshold would, in effect, be a disincentive to students, especially those from lower socio-economic backgrounds.’

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Higher Education Support Legislation Amendment (Student Loan Sustainability) Act 2018 (CTH) and Higher Education Support Legislation Amendment (Student Loan Sustainability) Bill 2018 (CTH), second reading speech and explanatory memorandum, as published on TimeBase LawOne.

[media release] Department of Education and Training, ‘A more sustainable higher education system,’ 14 August 2018.

Shalailah Medhora, ‘From next year you'll be paying back your student loans sooner,’ ABC Triple J, 14 August 2018.

Mid-Year Economic and Fiscal Outlook 2017-18 (December 2017).

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