At a time when politicians and activists in the U.S. are working to lower the student debt burden, Australia is doing the opposite. Universities in the country are now supporting changes to the HECS-HELP student loan program that would raise student loan costs for borrowers.
According to a report in the Australian Financial Review, Universities Australia, the main lobbying group for colleges and universities in the country, announced its support for changes to the Higher Education Loan Program (HELP) which includes a “moderate” uptick in the minimum repayment levels and fees associated with the loans, as well as stricter recovery of debt from borrowers who can pay back their loans but didn’t have to based on the current rules under HELP.
Catriona Jackson, Deputy Chief Executive of Universities Australia explained that HELP is important to Australia’s higher education system and that it needs to be sustainable from a financial perspective, which is why the lobbying group is backing these changes.
As the program currently stands, borrowers don’t have to pay any loan fees for taking courses that are subsidized by the government. Also, they don’t have to pay back loans if their annual income is less than $55,000, which the report noted results in people who are not the main bread winner never paying back their loans, even if the household makes more than the $55,000 threshold combined.
Education Minister Simon Birmingham is aiming to make the loan system more financially stable by basing repayment of loans on the income of the household and/or getting debts from the estates of deceased borrowers.
As for loan fees, the Universities Australia wants the government to review them and, when applicable, add it to the balance that the student has to pay back.
The Australian government currently has around $52 billion in outstanding HELP loans, $8 billion of which came from 2015 alone.
The move will keep Australia’s main student loan program financially sustainable at a time when the U.S. is struggling with more than $1.3 trillion in outstanding student loan debt. After all, that student loan debt has long term ramifications and is impacting everything from first time home sales to borrowers starting their own businesses.
While some U.S. politicians are calling for free or debt-free college, it’s not clear what, if anything, will happen to change the student loan debt situation in America. One thing is for sure, if the government in the U.S. moved to make student loans even more costly, it’s sure to face an enormous amount of backlash.
Author: Dave Rathmanner
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