Canberra lambasted

June 2, 1995

University students in Australia have condemned the federal government for tightening access to both the Higher Education Contribution Scheme and Austudy, the student support programme.

Concerned by the burgeoning amount of money that students now owe the Commonwealth, and by claims that wealthy Australians and foreign students are milking the HECS and Austudy schemes, the government announced it would "focus more sharply" on students in need.

The changes are expected to result in savings and faster repayments worth more than Aus$50 million (Pounds 23 million) a year.

A report by Monash University researchers late last year indicated that well-off Australian and Chinese parents were manipulating the Austudy and HECS systems.

The report suggested that many foreign students could enjoy Austudy benefits and then avoid HECS repayments by returning home immediately after graduating.

Under new provisions that apply from the start of 1996, Austudy and deferred HECS payments will not be available to New Zealanders or permanent residents who fail to take out Australian citizenship after three years.

Well-to-do Australian families who are able to minimise their taxation arrangements so their children can claim Austudy will also be subject to closer scrutiny.

Ross Free, the minister responsible for Austudy, said that more than 500,000 students were receiving Austudy benefits this year at a cost of $1.7 billion.

The new income-testing measures would result in savings to the budget of $13.5 million in 1995-96, rising to around $29 million a year.

The National Union of Students criticised the use of financial penalties to persuade foreign students to take out Australian citizenship. But it is hardly surprising the federal government wants to slow down the rising mountain of student debt, given that the Commonwealth is now owed more than $4 billion.

Since the HECS charge was introduced back in 1989, tertiary students have managed to accumulate $3.9 billion in deferred tuition fees and are only repaying what they owe at less than $300 million a year.

The debt burden was enhanced in 1983 with the introduction of a student loans scheme whereby students are able to swap part of their Austudy payments for double the amount as an interest-free loan.

In the past two years, almost 100,000 students have borrowed $320 million under the scheme. However, they do not have to start repaying the loans for five years first payments are due in 1998.

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