Interview on Triple J Hack with Avani Dias
Topics: Higher education reform
Avani Dias: If you’ve ever been a university student or you’re planning on it, you’ll have to start paying back your debt when you’re earning less. That change passed Parliament just moments ago; the Parliament’s agreed to make you pay back your HECS or HELP debt from when you start earning $45,800 a year. And the higher your income, the more you’ll have to pay back. Just a couple of months ago you had to be making 56 grand before you started paying off your debt. But this legislation passed the Senate by just one vote.
If this does affect you, how will it impact your lifestyle or do you think that this is a fair enough change? Give me a call: 1300 0555 36. Let’s find out why the Government’s followed through with this. Federal Education Minister Simon Birmingham, thanks so much for joining us.
Simon Birmingham: Great to be with you.
Avani Dias: Minister, what would you say to young people affected by this move who will now find it harder to make ends meet?
Simon Birmingham: Firstly, this is a very steady and careful change to the HELP repayment thresholds. It sees that on a starting salary of around $46,000 a year, people will start to make repayments in the order of about eight or nine dollars a week to their HELP loan. So, it’s putting in place a new one per cent repayment threshold that is lower than previous repayment thresholds, done carefully, but done in a way to ensure that future generations of students are going to be able to access the same generous student loan scheme without upfront fees, with a very generous concessional interest rate, to make sure everybody can get to uni.
Avani Dias: Sure, but students will be paying back their loans at an earlier time, so what do you say to those people who are already, as we know, facing difficult conditions?
Simon Birmingham: Well, we’ve done this in a careful way to make sure that what is really one of the world’s most generous student loan schemes stays that way – continues to be generous and continues to be accessible and available to future generations. We currently have about $54 billion worth of outstanding student loans under the HELP programs and on the previous policy settings, around one quarter of that was estimated to never be repaid. Now, that of course was going to create a circumstance where at some stage some future government would call crisis on that and potentially do something much more abrupt and negative, whereas what we’ve done is carefully recalibrate the repayment settings to make sure there are steady increments and to have a new lower one per cent repayment threshold.
Avani Dias: Sure, but this isn’t actually saving the government that much money, so why are you hitting students – it’s only $378 million over four years?
Simon Birmingham: Well, it will actually ensure through the whole lot of changes we’ve made that billions of dollars of additional repayments are ultimately made [indistinct]-
Avani Dias: Sure, but why this particular change, then?
Simon Birmingham: Well, you’ve got to look at the whole suite of changes and yes, we’ve put a new one per cent repayment rate in for the first step in terms of repayments. We’ve equally applied new higher repayment rates on higher incomes to ensure that people earning six figure sums are making potentially 10 per cent repayments at those higher levels. We’ve also ensured that there’s a limit in terms of the amount that can be borrowed. But again, a very fair and generous limit. And it’s about all of it working together [indistinct] guarantee that the loan scheme is sustainable and affordable for future generations.
Avani Dias: Okay. There have been a lot of changes. So can you guarantee you won’t cut any more from the higher education sector from now on?
Simon Birmingham: Well, we think we’ve got higher education in a sustainable position. The way in which we’ve addressed the loan scheme is about its future sustainability.
Avani Dias: So, will you make any more cuts?
Simon Birmingham: No, look the way in which we’ve now dealt with universities – who have record and growing funds available to them – is equally about ensuring the budget sustainability for those universities and for Australian taxpayers to fund the majority of their costs.
Avani Dias: Okay. So you can guarantee there won’t be any further changes in this sector?
Simon Birmingham: Of course, we’re not anticipating any changes in terms of budget settings.
Avani Dias: Minister, do you think that this will be a disincentive for students to go to uni, do you think it’ll discourage people from making this move?
Simon Birmingham: Not at all. In the 30 years since the Hawke-Keating Government introduced the HECS scheme originally, and through every change that’s been made to it since, the trajectory in terms of numbers of people going to university has only gone up. The numbers of people particularly from disadvantaged cohorts have continued to increase and increase in terms of quite significant numbers. And that’s great and that’s because we run a system where people don’t have to pay any fees up front.
Avani Dias: Thank you so much for your time, Minister.
Simon Birmingham: My pleasure.
Avani Dias: Federal Education Minister Simon Birmingham there.