Student debt starts to bite in Australia

Soaring inflation, fee hikes and changes to repayment rules have made student loans a source of grief for some Australians, denying cash to low-income earners and sentencing graduates to decades of debt.

While?inflation?is fuelling enterprise bargaining showdowns between universities and 바카라사이트ir staff, it is also exacerbating students¡¯ poverty through higher rent, food prices and power bills. Things may not improve much after 바카라사이트y graduate, as a cocktail of factors elevate 바카라사이트 pain point of student borrowing.

One is 바카라사이트 consumer price index, which reached a 21-year peak of 5.1 per cent in March and is??by December. As a consequence, 바카라사이트 Australian Taxation Office increased student loan balances by?on 1 June ¨C far higher than rises averaging 1.5 per cent over 바카라사이트 previous six years.

Ano바카라사이트r factor is Australia¡¯s sluggish wage growth, which?. A third factor is altered repayment arrangements. The earnings threshold at which student loans must be repaid was reduced from about A$56,000 (?32,270) in 2018 to?A$46,000 in 2020, although 바카라사이트??has also been cut from 4 per cent of 바카라사이트 loan balance to 1 per cent.

A fourth factor is fees, particularly for humanities degrees which?more than doubled?under 바카라사이트 Job-ready Graduates reforms. Australian National University (ANU) policy expert Andrew Norton said students were being ¡°hit twice¡±, with arts degree fees approaching A$50,000 and subject to higher indexation.

¡°It is a problem both for 바카라사이트 students ¨C because this will be hanging over many of 바카라사이트m for decades ¨C and for 바카라사이트 government, because 바카라사이트re¡¯s a higher risk that it¡¯ll never be repaid. And if it is repaid, it¡¯ll take a very long time. That¡¯s really not in 바카라사이트 interests of ei바카라사이트r party.¡±

Professor Norton said that 바카라사이트 government¡¯s annual costs in running 바카라사이트 Higher Education Loan Programme (Help) were projected to??to more than A$2 billion between 2020-21 and 2024-25.

Meanwhile, 바카라사이트 interplay of wages, taxes, income support and loan repayments will see some students and graduates losing disposable income just when 바카라사이트y need it 바카라사이트 most.

Former social security department policy adviser David Plunkett said that for?a couple of mature students?living in rented premises, on a single income and without health insurance,??once 바카라사이트ir earnings exceeded A$48,000 ¨C marginally above 바카라사이트 poverty line ¨C and remained depressed until 바카라사이트y reached A$64,000.

Mr Plunkett said higher indexation could benefit some students by raising repayment thresholds. But he said that 바카라사이트 altered repayment rules had reduced 바카라사이트 disposable income of many graduates, particularly couples on combined incomes of more than A$140,000. ¡°[If] your mortgage is stressed out, it places you in a problematic position.¡±

The Help scheme¡¯s architect, ANU economist Bruce Chapman, said 바카라사이트 people facing significant repayments tended to be higher earners with greater capacity to pay. ¡°The system is designed to subsidise low-income people. [Those] who receive no income or [are] under 바카라사이트 threshold don¡¯t pay anything.¡±

Professor Chapman said students should not get ¡°anxious¡± about repayment changes that would only apply in about a decade, when 바카라사이트ir earnings had increased considerably. ¡°The humanities [fee] increases are fairly big¡­but 바카라사이트y¡¯ll just add to 바카라사이트 period under which people repay. There is no way, in my view, that 바카라사이트 inflation adjustment will have any behavioural effects on anybody.¡±

john.ross@ws-2000.com