By Michael Koziol
The Turnbull government’s proposed lifetime cap on student debt would hit up to 30,000 current postgraduate students who will need to pay upfront or look for work rather than finish studying, according to new analysis.
A report commissioned by the Council of Australian Postgraduate Associations argues a growing number of students will come into conflict with a new $100,000 lifetime loan limit to be imposed from next year.
FEE-HELP, for full-fee paying students, was already capped at a similar level. But under the changes, Commonwealth-supported places will also count towards the lifetime limit. This will affect students who have enjoyed subsidised undergraduate study but later undertake full-fee postgraduate study.
The analysis, by consultant Nigel Palmer, said students on common postgraduate pathways in law, accounting, banking and business management were most likely to tip over the $100,000 threshold. This was increasingly common as students took on longer and more complex combinations of degrees, often without a break to enter the workforce.
“You can get to $100,000 very quickly,” said Mr Palmer, a former president of the council. “It’s not a luxury, it’s normal.”
The government has already compromised in the face of internal pressure by making the $100,000 limit replenishable, so that once students have paid off some debt, they can begin accruing it again.
Tax Office data shows the number of students with debt in excess of $50,000 has blown out from 23,664 to 159,475 in the past six years. Of those, 14,000 had accrued more than $100,000 in debt – up from just 2100 in 2010-11. The most indebted student in the country owed more than $462,000.
Education Minister Simon Birmingham said he made “no apologies” for stopping people “trying to game the system by racking up huge taxpayer-funded loans that they never expect to repay”. He said 99.5 per cent of students would still be able to complete one or two degrees without hitting the cap.
“Most people who go on to high level postgraduate study usually enter the workforce for a period of time so in many cases we’d also expect they’d pay down some of their taxpayer loan before returning to study,” Senator Birmingham said.
But Natasha Abrahams, president of the Council of Australian Postgraduate Associations, said about one in five students moved straight into further study without working down their debt, and this was becoming more common. Students who took VET programs before university, transferred degrees or had to repeat units would also be affected.
“For people who have taken strange journeys into university, they’re then going to be restricted later if they reach the cap,” Ms Abrahams said.
“If someone can’t borrow enough to cover the cost of their very expensive postgraduate coursework degrees, that means the only people who are going to do those degrees are those who can afford it.”
Legislation to enact these changes is expected to come before the Senate in June. The bill will also reduce the income threshold at which students must start repaying debt to $44,999 from $54,000.
Overall, the bill promises budget savings of more than $250 million over four years. But the lifetime cap on student loans will actually cost the budget $14.2 million in those years, because the savings don’t accrue until later and it is costly to administer.
In total there is more than $53 billion on the student loan books, owed by 2.6 million debtors.
Source : The Brisbane Times