A senate committee has finished examining a private members bill introduced by Australian Greens Senator Mehreen Faruqi which would halt indexation on student loans.
The bill also sought to raise the minimum repayment threshold for student loans – currently at $48,361 – and tie it to the median wage.
Student and tertiary education unions backed the bill, with the National Tertiary Education Union saying student debts were now rising faster than people were paying them off and becoming “a tax for life”.
This year, the indexation rate is predicted to be about 7 per cent, which would add an extra $1500 in debt on an average $25,000 student loan.
However, a parliamentary committee, led by Labor Senator Tony Sheldon, recommended the Greens bill be scrapped.
The committee – which was made up of three ALP senators, two Liberal senators and Faruqi from the Greens – said in its final report published yesterday it was worried about how much the changes would cost.
Departmental estimates suggested the proposed law could cost around $2 billion for the three years beyond the current financial year and $9 billion for ongoing revenue effects for loans made during that period.
The committee also noted a review of the higher education system was already underway through the Universities Accord process, announced by Education Minister Jason Clare last November.
In its final report, the committee recommended discussions around the affordability of the higher education system be continued within the Universities Accord process.
‘I’m utterly disappointed’
Julia Wilding, 23, is on the home stretch of six years of university study to become a qualified optometrist.
Having finished her undergraduate degree in biomedical science, she is now in her third and final year of a Doctor of Optometry at the University of Western Australia.
Wilding, who has a HECS debt of $130,000, will see the amount she owes increase by around $9100 if the predicted 7 per cent indexation is applied in June.
Adding to her financial worries is a requirement to pay the final six months of her university fees – $34,000 – upfront as she has now reached the HECS cap on her student loan.
“It’s definitely been very stressful,” Wilding said of the financial burden her $164,000 degree had placed on her.
Wilding said the cost of her degree was not something she had put a lot of thought into before she applied to do the course and it had blindsided her and many of her fellow students.
“I’ve always known that, for international students, they pay university fees upfront and they are exorbitant, but for an Australian citizen, I thought it’s just all covered,” she said.
The HECS or HELP loan cap – which was introduced in 2020 and this year sits at $113,028 for most students, aside from those studying courses such as medicine, dentistry, and aviation – had come as a nasty surprise, Wilding said.
“It’s really frustrating. I haven’t failed a single unit ever and I still have to pay out of my own pocket,” she said.
Wilding said the compulsory loan repayments taken out of her salary once she graduates would not be enough to keep pace with indexation.
“The indexation will still be higher, and I’ll still have more and more debt, which is crazy. It’s just another thing to worry about really,” she said.
Wilding said the huge costs of her degree did not make sense when there was such a desperate need for optometrists.
“In Western Australia especially, we’re experiencing a huge shortage of optometrists, particularly in regional areas. It’s a fly-in, fly-out kind of situation at the moment,” Wilding said.
Wilding, who grew up in a single-parent household with a relatively low income, said there needed to be more support for students who were struggling with burgeoning debts during a cost of living crisis.
“As a 23-year-old in this country, this is not what I should have to be dealing with. I am utterly disappointed and have no idea how I will get through.”
Indexation an ordinary part of system, Labor says
Faruqi, who tabled a dissenting report to parliament yesterday, said Labor and Liberal politicians were completely out of touch with the reality of millions struggling with student debt.
“The growing burden of student debt is making news every day and it’s beyond clear that urgent intervention is warranted,” she said.
“But Labor has elected to sit back and watch as millions of Australians are hit with a student debt avalanche on June 1.”
When asked last month if Labor would consider pausing the indexation on student loans, Treasurer Jim Chalmers said it was not something his government had been considering.
“This indexation that happens around the middle of the year every year happens regardless of who’s in office or all the other circumstances, and like a lot of other government programs, including payments, it’s indexed,” Chalmers said.
“The important thing to remember about student debt is that the repayments go up when your wages go up, when your salary goes up. That’s what determines how much you pay back.
“This is an ordinary indexation, and in terms of repayments and pressure on people, the repayments go up when your salary goes up, that’s how the system works.”