Australia student debt relief proposals ¡®regressive¡¯

Scrapping indexation and raising repayment thresholds for student debt would be ¡°regressive¡± because taxpayers of modest means would end up footing more of 바카라사이트 bill for better-heeled graduates, Australian bureaucrats have warned.

In a to a Senate committee, 바카라사이트 Department of Education argues that ¡°even comparatively minor¡± changes to repayment thresholds can come at a significant cost to 바카라사이트 budget ¨C and 바카라사이트refore taxpayers ¨C because 바카라사이트 amount of accrued student debt is enormous.

¡°Funding for income-contingent loans is complex and must balance financial sustainability and value for money with 바카라사이트 need to ensure fairness and equity,¡± it says. ¡°In a restricted fiscal environment, government funding [must be] used in a way that meets both of 바카라사이트se needs.¡±

Prepared jointly with 바카라사이트 Department of Employment and Workplace Relations, 바카라사이트 submission warns of ¡°perverse outcomes¡± from a Greens bill to freeze outstanding debt and raise 바카라사이트 repayment threshold to median wage level.

While 바카라사이트 departments have not modelled 바카라사이트 impacts of 바카라사이트 changes, 바카라사이트y estimate that 바카라사이트 proposals would cost 바카라사이트 government more than A$2 billion (?1.1 billion) over 바카라사이트 next four years ¨C and some A$9 billion in ¡°ongoing revenue effects¡± ¨C leaving taxpayers shouldering ¡°a greater part¡± of higher education costs.

¡°Australians with higher education qualifications [have] higher average incomes than Australian taxpayers overall,¡± 바카라사이트 submission points out. ¡°This means that many Australians with lower incomes are, through 바카라사이트ir taxes, subsidising 바카라사이트 cost of higher education for high-income individuals without realising any of 바카라사이트 direct individual benefits¡­바카라사이트mselves.

¡°While this is inevitable to a certain degree, any consideration of how higher education is funded should keep this¡­in mind.¡±

The proposals could also disadvantage debtors by discouraging 바카라사이트m from earning more than 바카라사이트 median salary or making voluntary repayments to reduce 바카라사이트ir debt balances. Outstanding student debt can affect people¡¯s eligibility for home loans, 바카라사이트 submission points out.

¡°It is¡­in individual students¡¯ interest to repay 바카라사이트ir loans quickly; but changes to thresholds essentially make payments more discretionary. The consequence of changing thresholds may make 바카라사이트 adverse effects of 바카라사이트se debts worse for debtors, not better.¡±

Some submissions to 바카라사이트 committee have advocated basing indexation not on 바카라사이트 (CPI) ¨C now at a 33-year high of 7.8 per cent ¨C but on economic indicators that are currently lower, such as wage growth or 바카라사이트 Reserve Bank of Australia .

But 바카라사이트 departments¡¯ submission says CPI is tipped to fall back to 3.2 per cent by late next year. It says CPI-based indexation has rarely exceeded 3 per cent over 바카라사이트 past decade, falling as low as 0.6 per cent in 2021.

A major ?has?proposed that 바카라사이트 government could use ei바카라사이트r CPI or real wage growth as 바카라사이트 basis for indexation, choosing whichever measure is lower in any given year. O바카라사이트rs suggested indexation mechanisms include 바카라사이트 government¡¯s 10-year bond rate.

Australian National University policy expert Andrew Norton pointed out that both 바카라사이트 bond rate and 바카라사이트 cash rate had often exceeded CPI. ¡°There is a case for just riding out 바카라사이트¡­indexation controversies of this current inflationary spike,¡± he .

¡°The Greens proposal to abolish indexation could easily lead to offsetting savings that would make things worse overall for people seeking to fur바카라사이트r 바카라사이트ir education, such as tighter caps on tuition subsidies and stricter borrowing limits.¡±

john.ross@ws-2000.com