Greens renew call for freeze of student HECS debts after committee rejects bill

The Greens push to raise minimum repayment threshold after a parliamentary committee advised against passing a bill aimed at easing the cost of living.

Greens Senator Mehreen Faruqi has called for the indexation of student loans to be frozen and the income threshold for repayments raised. Picture: NCA NewsWire / Gary Ramage

The Greens have renewed their push to freeze the indexation of student loans and raise the minimum income threshold at which repayments commence, after a parliamentary committee advised against passing a Greens bill aimed at easing the cost of living.

A report responding to the private senator’s bill put forward by Greens Senator Mehreen Faruqi has recommended that it not be passed and instead discussions about how to improve the affordability of higher education continue as part of the Universities Accord process.

Student loans – including the Higher Education Loan Program (HELP), student start-up loans (SSL) and trade support loans (TSL) – have reached $74bn nationally, with indexation rates expected to hit their highest rate in decades at 7 per cent from June 1, the report said.

Senator Faruqi has “firmly rejected” the committee’s recommendation, saying that the higher education system had turned student loans into a “tax for life”, with many students struggling to pay down ballooning debts over decades.

“The calls to scrap indexation are growing louder and louder as people struggle under the crushing weight of soaring student debt,” she said in her response to the report’s findings.

“The burden of student debt is making life harder for so many in the community and it will only get worse on 1 June 2023, unless the government intervenes.

“It is a disgrace that people are shackled with a life-long burden of ever-increasing debt, simply for pursuing higher education.”

The bill had also proposed raising the pay threshold at which student loans needed to be repaid from $48,361 to the median wage or approximately $62,400, with Senator Faruqi describing the current threshold as “excruciatingly low”.

“Lowering the minimum repayment income disproportionately affected students and graduates on low-incomes and completely abandoned the principle that students should only begin repaying their debts when they earned roughly the average wage,” Senator Faruqi said.

Senator Faruqi has renewed the Greens’ call for tertiary education to be free and all student debt wiped, arguing that education was a “right, not a privilege reserved for just those who can afford to pay for it”.

“No one should be shackled with tens of thousands of dollars of debt that can take a lifetime to pay off, just to pursue higher education,” she said.

However, the committee found that the bill would likely have “significant financial impact” and the evidence showed there were more practical ways to improve the affordability of higher education loans and tackle cost of living.

The report noted that adjusting indexation would result in “significantly higher costs to the Australian government across the loan program” and that from a federal budget perspective rising inflation made an “argument for retaining indexation on loans”.

“While most participants in the inquiry supported the intent of the bill, the committee also received evidence that the measures proposed in the bill may not be the most effective way to address the issues it proposes to resolve,” the report said.

“Further, the bill is likely to have significant financial implications.”

The committee also heard that as student loan repayments are calculated on income rather than on the amount of their student loan it would “make no difference to the cost-of-living pressures being faced by people with a study loan”.