pOLicy & refOrm
campusreview.com.au
The $42,000 question
A proposed lower threshold for loan repayments
has caused disagreement over the best approach
to managing the student debt system.
By James Wells
T
he Grattan Institute’s call to lower
the HELP repayment threshold
is sparking fresh debate over the
future of higher-education loans, dividing
experts and stakeholders alike.
A recently released Grattan report titled
HELP for the future: fairer repayment of
student debt, has argued for the threshold to
be lowered from $54,126 to $42,000 to curb
ballooning debt from unpaid loans. One of
the main reasons Grattan chose that new
number was Labor’s previous requirement
that the threshold stay above $40,000.
As of the end of the 2014–15 financial
year, the total HELP debt was $42.3 billion.
The federal Education Department
estimates one-fifth of these loans will
never be repaid. Graduate repayments are
increasing steadily, hitting about $2 billion
last year. However, this is far outpaced by
the rate of HELP lending, which was just
under $8 billion.
Andrew Norton, Grattan higher
education program director and the report’s
co-author, notes that the HELP repayment
threshold is roughly $20,000 above that for
other government welfare loans. He says
that is much higher than needed.
“Graduates are not a special class of
12
people deserving of much more generous
treatment than other Australians needing
the government’s assistance,” Norton tells
Campus Review.
But the federal opposition isn’t placated.
It says $42,000 simply isn’t fair to graduates.
“Labor has previously [rejected] and
will continue to reject calls for a lower
repayment threshold of $30,000 or
$40,000, on the grounds of fairness and
impact,” Kim Carr, shadow minister for
higher education, and Sharon Bird, shadow
VET minister, say in a joint statement. “A
threshold of $42,000, as recommended
by the Grattan report, also fails these tests.
As the report itself acknowledges, if the
threshold is lowered, it will be women,
lower-income earners, people in part-time
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