Australian student debt cap decision delayed to May

By @AtanuShaw on
Student loan

The Australian parliament has postponed decision on the government’s plan to curb the growth of student debt in the country. The upper house did not have enough time to discuss and debate on the proposal on March 28. They will do so when they return on May 8.

According to reports, the bill reached the Senate after it cleared the House of Representatives. However, several other pieces of legislation were up for discussion, prompting government strategists to accede to the delay.

Government gives in to opposition and student’s protests

The current version of the bill has gone through several amendments. The most recent one shows the government’s accession to student protests and opposition from other legislation.

The government originally proposed to impose a borrowing cap at $104,440 for students in most disciplines and $150,000 for students pursuing medicine, veterinary science or dentistry. In the revised bill, however, students will now be allowed to borrow above the limits if they are able to repay enough money to reduce their debts and keep them below the caps.

The amendment comes after considerable opposition from legislators were voiced out, as well as a possible rejection of the proposal when it passes through the legislative bodies.

The bill also proposes a reduction in the repayment threshold of loans, previously pegged at $55,000, to a lower $45,000. This signifies that once former students reach this income level, they are required by law to start repaying their student loans.

Students to lose resources for continuous studies

Labour opposes the proposal because of the limits it will place on how much students can borrow. According to news reports, they believe it also “attacks students and would undermine the fairness of Australia’s world-class student loans scheme.”

For students in Australia’s higher education system, it will mean losing an enormous amount of resources for their education. Student loans have long been considered a reliable source of much-needed quick cash for university students.

If the bill passes, higher education will reportedly become less accessible to those families with lower incomes. It is also expected to limit them from pursuing further studies to improve themselves through post-graduate training and courses.

Former students who finish university studies and find employment will no longer be encouraged to continue in higher education. Once they reach the income level of $45,000, they need to start paying off their debts. This loan obligation along with increasing housing and living cost will make them stop and think twice before considering post-graduate studies.

Government wants to curb student debt, after freezing university funding in 2017

The proposed change in student loan policies comes after the Australian government froze funding for bachelor’s degrees in December 2017. This left universities short of $2.2 billion in funds as well as a possible reduction in the number of students to be taken in.

According to government ministers, the Commonwealth Grant Scheme for undergraduate courses will remain at 2017 levels for 2018 and 2019. Further increases in funding will be made possible after an assessment of performance and demographic data.

In July 2017, the government expected that only $35.9 billion of the whopping $55.4 billion of outstanding student loans will be recovered. Minister of education and training Simon Birmingham said that these changes will help the country “face up to the task of putting our higher education costs on a more sustainable, responsible path for the future while also having a stronger focus on supporting students.”

MPs propose to collect student debt after death

In recent developments, Federal MPs from both ruling and opposition parties called for policies for student debt to reduce the amount of higher education debt every year. In Australia, student debts are written off upon death, leaving them to be paid off by taxpayers, usually in billions annually. This has led to proposals from certain MPs to find a way of recovering debts from deceased estates.

According to MP Ben Morton, “student loans should be treated in the same way as tax debts and social security debts because that is exactly what they are.” An earlier study by the Grattan Institute found that the government attempting to recover debt from deceased estates of more than $100,000 would mean a return of A$2.8 billion annually to government funds.

These moves, however, are being opposed by the Federal government, as the Education Minister said they have no plans to collect from deceased estates. They reportedly remain open to continuing discussions and debate for the “long-term sustainability” of the student loans scheme.