A new report has called for higher education students to be hit with a 15 per cent fee on their student loans in an attempt to rein in government spending.
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The Grattan Institute’s report said the increase in fees for the Higher Education Loan Program could save the Commonwealth $700 million a year.
“The government could recover most of its interest costs by charging loan fees on all new HELP lending,” it said in the report.
“Loan fees would be added to borrowers’ outstanding balance.”
A universal loan fee would mean some students, such as those in vocational education, could be left paying less while postgraduate and government-supported students would pay more.
“Charging some students high loan fees and other students no loan fees is unfair and has no policy rationale,” the report said.
Australia has about $52 billion owing in HELP debt with university graduates currently not paying anything back until their income reaches $54,869 a year.
Grattan Institute higher education program director and report co-author Andrew Norton said the government had to control its costs.
“With a universal 15 per cent loan fee, high-income graduates who repay quickly would more than cover their interest costs,” the report said.
“They would cross-subsidise the cost of low-income graduates who repay more slowly.
“The government could recover most of its interest costs by charging loan fees on all new HELP lending.”
National Tertiary Education Union Tasmanian acting secretary Jenny Smith said this would further benefit wealthy students who were able to pay off their debts up-front rather than take out a loan.
“I think it has great potential to have a scare-away affect,” Ms Smith said.
“Anything that adds cost to your education is going to act as a disincentive.”
Federal Education Minister Simon Birmingham said the government would ensure all students who wanted to go to university would have the opportunity to do so.
“The Turnbull government has ruled out full fee deregulation and guarantees that no Australian undergraduate student will need to pay anything up front,” Mr Birmingham said.
“This new, independent report is a welcome demonstration of just how generous Australia’s student loans are.
“While we will consider its findings alongside all of the other evidence we are weighing up, I guarantee that, whatever we do in the future, the Turnbull government will ensure HELP student loans will continue to be one of the cheapest loans people will ever get.”