Designing a more sustainable student loan system

by Andrew Norton and Ittima Cherastidtham


Submission to the Education and Employment Legislation
Committee on the Higher Education Support Legislation
Amendment (Student Loan Sustainability) Bill, March 26 2018

The Higher Education Loan Program is the Commonwealth Government’s biggest lending program. Of the $55 billion of outstanding debt, nearly $20 billion is not expected to be repaid. Reform is needed. The Commonwealth Government proposes ways to reduce the cost in the Higher Education Support Legislation Amendment (Student Loan Substainability) Bill 2018. These include reducing the initial HELP repayment threshold from $52,000 to $45,000, recalibrating the upper thresholds, and indexing all thresholds to CPI. In their submission to the Senate Education and Employment Legislation Committee, Grattan Institute’s Higher Education Program Director Andrew Norton and Fellow Ittima Cherastidtham support reducing the initial HELP repayment threshold, and indexing all thresholds to CPI. But the Bill as written would collect less repayment from people with incomes between $58,000 and $95,000. The submission suggests alternative thresholds that would remedy this problem.