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Repay Your Student Loan While in College: A Brand New Idea by the Government

September 16th, 2016 Leave a comment Go to comments

piramide teach at the universityThe Australian government has worked out a number of new measures to make higher education cost more. Besides, according to the 2016 Budget students will have to payback their loans considerably sooner. The authors call their innovations ‘alternative model of flexibility’. That means actually just a start for fractional deregulation, where higher schools are able to set their own tuition fees for their courses, losing out on state funding.

Moreover, the Government requires students to repay their tuition fee loans before their graduation. The 2016 Budget has hundreds of pages and thousands of numbers, so it’s not easy to find a hidden sentence which can terrify students and graduates. It says, ‘Recent public debate on HELP repayments have partly focused on those people, who have HELP debts, earn less than the current repayment threshold, but who live in high-income household. To improve repayments from this group, it has been suggested that a household income test be introduced’.

Fine Print

Buried among other statements and numbers in the ‘Driving Innovation, Fairness and Excellence’ chapter it is the only one referring to the ‘household income test’ in the new Budget. Seems like the authors did not want anybody to find that sentence.

Potential Consequences

But what does a household income test mean? The test serves to evaluate how much money a student’s family earns each year. So, the total household income consists of a student’s income plus his or her family’s earnings.

Let’s take a look at how the suggested changes affect people. For example, a student is 25, studying a three year Law degree. He or she has a casual job, but does not earn even near enough to start paying back $50,000 of the student loan yearly. At the same time our student can’t afford to pay rent, so he or she lives with parents. In this case the parents’ income is included in the total ‘household income test’. Let’s suppose, the student’s dad, who is a cleaner, and mum, who folds shelves at a local supermarket, earn the minimum salary of $34,000 a year. Their total earnings are $68,000, which pushes our student over the HELP refund threshold.  This means bads news. He/she has to start repaying the student loans while studying. It sounds like an advance fee.

Growing Debt

But what is the reason of such changes to university degree contributions? The government estimates students’ debts to be more than $70 billion by 2018. That’s why repaying the student loans needs to be done so urgently. At the same time, lowering of the refund threshold to $50,000 has been proposed.

However, both the lower threshold and the household test are merely government proposals.

Simon Birmingham, the education minister, confirms that the government will not take a higher education policy to the federal election.

Instead of that, the government will conduct a number of consultations with universities and wait till the end of 2016 or early 2017 to declare the new reforms. The higher education changes are being planned to enter into force in 2018.

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