Students to pay loans quicker

UNIVERSITY students and graduates are concerned the proposed drop of the HELP debt repayment threshold will have negative financial consequences.

University leavers are currently not required to repay their HELP debt until they earn $51,309 annually.

At this amount, the required four per cent weekly repayment is about $39.50.

The Commission of Audit recommended the threshold be reduced to the minimum wage, which is currently $32,354 per year, with a repayment of 2.5 per cent.

If included in the budget, minimum wage earning graduates would be forced to pay $15.55 per week off their debt, a total of $808.85 annually.

Third-year Monash University journalism student and Yinnar resident Sarah Price believed the repayment would not be affordable for soon-to-be graduates in her faculty, who would earn $624 on average per week after tax if they worked for a country non-daily newspaper.

“In the normal third-year cadetship, I don’t think it’s really affordable,” Ms Price said.

“If a cadet had to move to the city and pay for rent and everything else that comes with living out of home, it’s just another expense which most people can’t afford.”

Ms Price believed most university students would be against this change as they needed more government support.

“It is simply not cost effective or administratively efficient for the Commonwealth to provide a loan scheme – potentially to be repaid after a period of years – to cover an amount of $273,” the audit said.

Other recommended changes to the HELP system included combining all streams of HELP to the one loan and discarding SA-HELP, which covers student amenities fees of $273 per year.

With the Commonwealth Grants Scheme currently paying 59 per cent of fees and students paying the remaining 41 per cent, the audit has suggested students pay 55 per cent while the government would pay 45 per cent.

To reduce possibilities of Australians working overseas and not paying their HELP debts, the report proposes the interest rate on debts become marginally higher.

Other proposals include deregulating fees and tasking the Minister for Education to choose which courses should be funded based on demand.