HELP for the future: fairer repayment of student debt

Since 1989 nearly four million Australians have taken out [Higher Education Loan Program] HELP student loans, greatly expanding access to tertiary education. But too many HELP borrowers either do not repay what they owe, or take too long to clear their debts. Without change, HELP's costs will escalate, putting other education programs at risk of cuts. In 2014-15, the government lent students $7.8 billion. An estimated 20 per cent, or $1.6 billion, won't be repaid. Interest subsidies on outstanding HELP debt add $200 million to HELP's costs, but would be five times higher if interest rates return to previous levels. A major cause of HELP's problems is that debtors who earn less than its initial threshold – currently $54,126 – do not repay. A lower $42,000 threshold in 2016-17 would be a more realistic way to address major trends in the earnings of those with HELP debts. This report concludes that lower thresholds are both efficient and fair. Unlike other possible cuts to education spending, expenditure on HELP can be reduced without damaging its vital education and social policy goals.