Student loans in Australia

Tertiary education fees in Australia



Higher education fees in Australia are charged to all students, but Australian citizens and (with some limitations) permanent residents are able to obtain interest free loans from the government under the Higher Education Loan Programme (HELP) which replaced the Higher Education Contribution Scheme (HECS). Most students are Commonwealth supported, which means the Commonwealth Government pays a contribution to the fees and students are able to defer payment of the remainder of the fees, which for Commonwealth supported students are called the "student contribution". Some domestic students are full fee-paying (non-Commonwealth supported) and while they are able to obtain subsidised loans from the Government up to a lifetime limit of $100,000 for medicine, dentistry and veterinary science programs and $80,000 for all other programs, they receive no other direct government contribution to the cost of their education. Overseas students are charged fees for the entire cost of their education and are ineligible for any loans from the Commonwealth.

HELP is jointly administered by the Department of Education, Science and Training (DEST) and the Australian Taxation Office (ATO).

Domestic Students

Commonwealth Supported Students

The Government allocates a number of undergraduate places to each public higher education provider in Australia that are designated as Commonwealth supported places at university. These places are allocated to students via the tertiary admissions centre in each state or territory but are usually based on secondary school results (through the TER), TAFE qualifications and previous university results. Commonwealth supported places are available to citizens of Australia and New Zealand, as well as some Australian permanent residents. If a student is in a Commonwealth supported place, they only make a contribution towards the cost of their education (known as the student contribution) while the Australian Government contributes the majority of the cost.

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Student Contribution
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Band Curriculum Areas Contribution For 1
EFTSL
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National Priority Education, Nursing $0 –$3,998

Band 1 Humanities, Arts, Behaviouralscience, Social studies, $0 –$4,996
Foreignlanguages, Visual and Performing arts

Band 2 Accounting, Commerce, Administration, Economics, $0 – $7,118
Mathematics, Statistics, Computing, Architecture,
Health Sciences, Engineering, Science, Surveying,
Agriculture

Band 3 Law, Dentistry, Medicine, Veterinary science $0 -$8,333
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The student contribution varies for each course. It is based upon the expected earnings following a students' graduation, not the cost of providing the course. The Government allows higher education providers to set their own contribution up to a maximum level (although since the government underfunds universities per place themselves, the universities almost always charge the highest level allowable[citation needed]). A student can pay the entire contribution and receive a 20% discount or defer payment on the contribution through a HECS-HELP loan from the Commonwealth Government. It is possible to defer payment on some of the contribution and pay part upfront. In cases of part payment, a 20% discount is received on the amount paid. Students who are New Zealand citizens or new Australian permanent residents are ineligible for HECS-HELP loans and must pay the entire contribution upfront and receive no discount.


Full Fee-Paying Students

Students who do not receive a Commonwealth supported place are able to obtain a full fee-paying place as long as their tertiary entrance rank or other qualifications exceed a certain minimum. Most postgraduate courses do not have Commonwealth supported places available and therefore all students are full fee-paying. Full fee-paying students are charged the full cost of their course, with no direct Commonwealth subsidy.
Full fee-paying students are able to obtain loans under the Higher Education Loan Programme called FEE-HELP loans to cover all or part of their fees. Students who obtain these loans are charged a 20% loan fee on top of the amount borrowed. Students are able to borrow a lifetime maximum FEE-HELP loan of $100,000 for medicine, dentistry and veterinary science programs and $80,000 for all other programs (adjusted for inflation). FEE-HELP loans replaced the Open Learning Deferred Payment Scheme (OLDPS), the Postgraduate Education Loan Scheme (PELS) and the Bridging for Overseas-Trained Professionals Loan Scheme (BOTPLS).

OS-HELP

OS-HELP is a loan scheme to assist some undergraduate domestic students to undertake some, but not all, of their course of study overseas. Students are able to obtain a loan of $5,000 for every six months, but can only receive a total of two loans throughout their lifetime. Unlike other loans in the HELP, the loan amount is paid directly to the student and the terms for the loans are set out by the tertiary providers.
As in the FEE-HELP loan scheme, a 20% fee applies on the amount borrowed.

Loan repayment under the HELP

HELP debts are repaid through the taxation system and repayment is administered by the Australian Taxation Office. People with a HELP debt are obligated to make compulsory payments each year if their HELP Repayment Income (HRI) exceeds a certain threshold, which for the 2007-08 financial year is $39,825. HRI differs from the usual calculation of taxable income in that it includes any amount that taxable income has been reduced by a net rental loss and includes fringe benefits from employment. Unlike marginal tax rates, the repayment rate applies to all income earned. For example, a person that has a HRI of $39,500 in a financial year does not have to make any compulsory HELP repayment, but a person who has a HRI of $40,000 is compelled to make a payment of $1,600.
The indexation rate is applicable to the part of the debt that has been unpaid for 11 months or more. Thus, indexation is calculated on the opening balance plus any debts incurred in the first half of the current year deducting any compulsory or voluntary repayments.
After the indexation rate is applied to one's account, the new balance must be a whole dollar amount. Any cents in the total are discarded.
The rates for compulsory repayment for the 2007-08 financial year, also compared with previous years, are:

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HELP Repayment Income (HRI) compulsory repayment 2006-2008
---------------------------------------------------------------------------------------------------------------HRI 2005-06 HRI 2006-07 HRI 2007-08 Repayment Rate

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Below $36,185 Below $38,149 Below $39,825 Nil

$36,185–$40,306 $38,149-$42,494 $39,225-$44,360 4% of HRI

$40,307–$44,427 $42,495-$46,938 $44,360-$48,896 4.5% of HRI

$44,428–$46,762 $46,839-$49,300 $48,897-$51,466 5% of HRI

$46,763–$50,266 $49,301-$52,994 $51,466-$55,322 5.5% of HRI

$50,267–$54,439 $52,995-$57,394 $55,323-$59,915 6% of HRI

$54,440–$57,304 $57,395-$60,414 $59,916-$63,068 6.5% of HRI

$57,305–$63,062 $60,415-$66,485 $63,069-$69,405 7% of HRI

$63,063–$67,199 $66,486-$70,846 $69,406-$73,959 7.5% of HRI

$67,200 and above $70,847 and above $73,960 and above 8% of HRI

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Students are also able to make voluntary payments to the ATO. These payments attract a 10% discount for repayments over $500. This means that if a person voluntarily repays $1000, the debt is reduced by $1100. If the remaining debt is less than $500 the discount still applies. HELP debts do not attract interest but are instead indexed to the Consumer Price Index (CPI). the 2006 indexation rate is 2.8%. If a person with a HELP debt dies, the debt is cancelled (ie. the debtor's estate is not required to pay the debt).

HECS becomes HECS-HELP: changes to the system in 2005

As of 2005, the Howard government have deregulated university fees. HECS-HELP (formerly HECS) maintains the same principles of HECS, however have since undergone major changes. The deregulation of university fees permits universities to increase tuition costs for university places (by a maximum of 25%). If a student receives a HECS-HELP loan, the Australian Federal Government pays the loan amount directly to the higher education provider on behalf of the student. "HECS" now refers to pre-2005 debt, and HECS-HELP refers to debt from 2005 onwards.
This deregulation of HECS-HELP has also resulted in a limit in the number of years a student may study in a Commonwealth Supported Place (CSP). As of 2007, all students may only study for a maximum of 7 years full-time in commonwealth supported university places (16 years part-time). This does not include any existing HECS debt (prior to 2005).
Known as Student Learning Entitlement (SLE), Students may only study in a Commonwealth Supported Place for a maximum of 7 years full time.. Once these SLE points are used, students are no longer entitled to CSPs, and must take either a post-graduate FEE-HELP load (if available) or undertake a FULL-FEE place.
An alternative option is FEE-HELP (formerly PELS). FEE-HELP provides eligible fee-paying students with a loan to cover their postgraduate tuition fees. This option is only available for post-graduate students attempting an eligible post-graduate course. In 2007, the FEE-HELP lifelong limit is $80,000, and $100,000 for students studying dentistry, medicine or veterinary science. Students cannot borrow any more than $50,000, even if once debt is repaid. See the official website for details.
Once a student has used up all of their SLE points, they may only study under a FEE-HELP course (capped at $50,000) or as part of a FULL-FEE course. Full-Fee courses are relatively expensive courses where students must pay their all of their tuition costs upfront, which is a significantly larger debt than a standard HECS-HELP loan, usually taken for its lower academic entrance requirements.
FEE-HELP courses are available at a post-graduate level (and occasionally for some undergraduate FULL-FEE places) however they are not available at every institution or in every course. The only remaining option is a FULL-FEE place paid upfront.
Once students have used all of their SLE points, students however cannot enroll in an undergraduate degree again unless it is a FULL-FEE place.

Indexation Rate Formula

The indexation rate equal to CPI (currently 2.8%) is applicable to the part of the debt that has been unpaid for 11 months or more. Thus, indexation is calculated on the opening balance plus any debts incurred in the first half of the current year deducting any compulsory or voluntary repayments.
After the indexation rate is applied to one's account, the new balance must be a whole dollar amount. Any cents in the total are discarded.