No deal on plan to cap Australian student debt levels

Parliamentary debate on proposal to limit learners’ lifetime borrowing deferred for at least six weeks

March 28, 2018

The Australian government’s bid to curb student debt has been put off until at least May, after parliament’s upper house ran out of time to consider the proposal.

The government had planned to seek an exemption from a rule that normally obliges the Senate to defer debate on legislation introduced from the House of Representatives in the last few days of parliamentary sitting sessions. However, government strategists decided that there was no point because there would not have been time to debate the bill anyway, with eight other pieces of legislation ahead of it in the queue.

The strategists’ job is unlikely to be any easier in parliament’s next sitting, with the federal budget due to be handed down when politicians return to Canberra on 8 May.

Under the legislation, the repayment threshold at which former students must start repaying their debts would be lowered from the current level of A$55,874 (£30,300) to A$45,000. The bill also changes the indexation formula applied to the threshold, so that it rises more slowly than it has in recent years.

The bill’s provisions also prevent students from accumulating debts of more than A$104,400, or A$150,000 in the expensive disciplines of medicine, dentistry and veterinary science.

The government says that these are moderate measures to reduce taxpayer exposure to the student loan schemes, with total unpaid debt now sitting at about A$55 billion. About one-quarter of this is not expected to be repaid.

More than 11,000 university students and graduates have amassed student debts of more than A$100,000, with some owing close to A$500,000.

However, student groups and opposition MPs say that the lower repayment threshold will hurt low-income earners already struggling with Australia’s extraordinarily high housing and living costs. And they say that the debt cap will force students with higher degree aspirations to interrupt their studies, taking poorly paid jobs to pay down their debt balances.

With the Greens firmly opposed to the legislation, it will not pass without support from nine of the 11 crossbench senators.

In a sign of the difficult task awaiting government negotiators, one of these crossbench MPs has circulated amendments calling for the proposed repayment threshold to be lowered to A$30,000 – while a competing amendment from another crossbencher would raise the cut-off to A$50,000.

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