Student debt wiped, and students will be paid to go on placement
Jim is an Associate Editor at Wonkhe
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And so two bits of policy news over the weekend from down under very much caught my eye.
The first concerns student debt – where the interest rate for HECS (Higher Education Contribution Scheme) and HELP (Higher Education Loan Program) have traditionally been linked to the Consumer Prices Index.
The schemes are similar to those here insofar as there’s a repayment threshold ($51,550, roughly £27,172), but dissimilar insofar as there’s no write-off term (although debt is wiped on death).
These are student loans designed to be paid off – the repayment rate increases as income rises, starting at 1 per cent and going up to 10 per cent of income for higher earners.
The problem last year was that CPI was growing much faster than wages – which meant that many more loans than usual were growing faster than Australians could pay them down.
Now education minister Jason Clare has announced a kind of “double-lock” – the indexation rate will instead be linked to whichever is lower of CPI or the wage price index (WPI).
This will wipe out what happened last year and make sure it never happens again.
About 3 million Australians hold student loan debt, at an average of $26,500 – and the measure is set to cut about $1,200 from their balance.
Meanwhile following recommendations in the Universities Accord, the Albanese Government has announced that it will pay students undertaking compulsory work placements across teaching, nursing, midwifery and social work disciplines.
The Commonwealth Prac Payment will provide around 68,000 eligible higher education students with $319.50 per week during their clinical and professional placement periods.
Skills and Training Minister Brendan O’Connor:
This is an additional payment to support nursing TAFE students who have extra costs such as uniforms, travel, temporary accommodation or child care, during mandatory clinical placements.
Universities Australia CEO Luke Sheehy:
These students can’t graduate without practical experience, but too many are being held back by placement poverty which can be the difference between commencing and completing a degree. This isn’t good for students or key areas of our workforce which are crying out for more graduates.
Unlike in Westminster, this is very much education spending announced by the Ministers for Education and for Skills and Training – our weird cut n shut of student finance arrangements driven by spend and subsidy from the Department for Education (DfE), and top up arrangements from the Department of Health (made even more complicated once you spot that some of the former is devolved, but some isn’t) make an announcement of this clarity impossible without some machinery of government shenanigans.
But it’s at least a signal that even if alleviating student poverty doesn’t sound like it would attract a priority status in Westminster politics, the training (and costs) of future public servants can be framed as another, more positive story.
Thanks for the overview Jim.
A couple of small points here just for accuracy sake – HECS (Higher Education Contribution Scheme) and HELP (Higher Education Loan Program) are the same loan system. HECS-HELP is the undergraduate public university loan students can get, FEE-HELP is mostly for private universities and post-grad, OS-HELP is for students going on exchange and SA-HELP is for student amenities fees. It’s the same scheme and the total debt amount per student is indexed by the Tax Office to CPI as stated.
The proposed changes to index to CPI or wage growth – whichever is smaller is a welcome change. As would be a change to the timing of indexation if the Albanese government decided to implement that recommendation. Currently the HELP loan is indexed in June and then the payments made throughout the year are taken off the balance *after* that. It was recommended to first reduce the balance and then index what is left over for the next year. Very wonky apologies, but it was also a very sneaky piece of government policy.
I think it may also be worth pointing out that the reference to TAFE and the Skills and Training Minister is not the same as higher education. Australia has a very distinct VET (vocational education and training) system that includes all the technical college type learning like trades apprenticeships – basically anything under a Bachelors degree on the Australian Qualifications Framework. There are a couple of dual sector providers in Australia but in large, nursing TAFE students are not studying an undergraduate degree at a university.
There has also been a lot of interesting public backlash to the announcements of these payments in Australian media given that when calculated per hour of work placement (using nursing as an example) it comes out to about £4.20/hour which students interviewed say is insulting since minimum wage in Australia is equivalent to £12.21/hour.