IHEA CEO Represents Independent Higher Education Sector at Senate Education and Employment Legislation Committee

On Friday 17 March, Independent Higher Education Australia (IHEA) CEO Dr Peter Hendy represented IHEA members by appearing in person at the Senate, Education and Employment Legislation Committee on Education and Other Legislation Amendment (Abolishing Indexation and Raising the Minimum Repayment Income for Education and Training Loans) Bill 2022.

IHEA supports the Bill in principle as it puts students first, consistent with IHEA’s ongoing advocacy for a more equitable tertiary student loan scheme. However, this Bill amends minimum loan repayment thresholds without implementing equitable tertiary student funding settings for all Australian students.

The Bill proposes to remove indexation and raise minimum repayment thresholds (to the median wage), which is a good outcome for students given current pressing economic conditions. While the Bill before the Senate Committee is contextually positive for students, IHEA argues further amendment is required to ensure all tertiary students are treated fairly and equitably under Government funding arrangements.

Students who study at an Independent higher education provider are still required to pay a 20 per cent loan administration fee (tax) above and beyond their student debt loan amount.

IHEA calls for equitable loan fee settings for all tertiary students.

Current student loan funding arrangements continue to distort student choice in favour of providers and courses that may not necessarily be best suited to students’ interests nor their long-term career success. The loan commences as an additional 20 per cent charge on the principal loan amount and continues to grow through the compounding impacts of indexation. This Bill will potentially help many students struggling to live and pay their loans based on the current minimum repayment threshold. However, existing inequitable arrangements still entrench disadvantage and longer-term debt for students in Australia’s Independent higher education sector.

IHEA advocates to end student loan inequity by ending the loan tax, which iniquitously only applies to independent sector students.

Concerning the removal of loan indexation, from a Federal Budget perspective rising inflation levels make an argument for retaining indexation on loans. However, from a social equity perspective and putting students’ first, removal of indexation would increase access to higher education as indexation substantially increases student loan debt (consider here the impact of the 20 per cent loan fee / tax).

If students take a long time to pay their debt or reach the minimum repayment threshold, their loans will continue growing - impacting their life-long learning and in the first instance, study choice. Consequently, IHEA advocates for the development of a universal, income-contingent loan scheme with equitable loan settings for all tertiary students. Ideally, such a scheme would include loan parameters that encourage early and timely repayment to mitigate against longer debt repayments given associated impacts on debt on financial independence.

IHEA looks forward to working with representatives of the Senate Committee and other members from across the parliament to discuss the matters raised and potential solutions.

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