Education Loans

As a general rule, all students who attend Australian tertiary education institutions are charged higher education fees. However, several measures are in place to relieve the costs of tertiary education inAustralia.

Most students are Commonwealth supported. This means that they are only required to pay a part of the cost of tuition, called the "student contribution", while the Commonwealth pays the balance; and students are able to defer payment of their contribution as a HELP loan. Other domestic students are full fee-paying (non-Commonwealth supported) and receive no other direct government contribution to the cost of their education. They can also obtain subsidised HELP 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. Australian citizens and (with some limitations) permanent residents^[1] 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).

HELP is jointly administered by the Department of Education, Science and Training (DEST) and theAustralian Taxation Office (ATO).^[2]

In addition, qualified students may be entitled to Youth Allowance or Austudy Payment to assist them financially while they are studying. These support payments are means and assets tested. Further assistance is available in the form of scholarships.

Overseas students are charged fees for the full cost of their education and are ineligible for any loans from the Commonwealth, but may apply for international scholarships.

[edit]History

In 1940, the Curtin Labor Government saw a need for the country to increase the number of university graduates and for more civil and military research. To do this, it dramatically increased the number of scholarships it offered to enter university and allowed women to apply for these scholarships (they were previously exclusive to men). The Menzies Liberal Government also supported and extended the ability of ordinary Australians to attend university.

In the 1960s, the Menzies Government encouraged and funded the establishment of new universities to cater for increasing demand. These universities were built in outlying suburbs and offered special research scholarships to encourage students to undertake postgraduate research studies. Many of the universities that were established under this scheme are members of Innovative Research Universities Australia.

In 1967, the Government created a category of non-university tertiary institution (called College of Advanced Education (CAE)) that would be funded by the Commonwealth. These CAEs were easier to access and cheaper to attend than the traditional university, while delivering many university-equivalent Bachelor degrees.

[edit]Whitlam's abolition of university fees

During the early 1970s, there was a significant push to make tertiary education in Australia more accessible to working and middle class Australians. The Whitlam Labor Government abolished university fees on the 1st of January 1974. This decision did not greatly change the socio-economic backgrounds of students attending universities because only 20 to 25 percent of students paid fees as most had Commonwealth scholarships. Another reason for the lack of change was because low high school retention rates had resulted in many young people from disadvantaged backgrounds not completing secondary education and therefore never having the opportunity to choose to attend university.

[edit]HECS

In 1989, the Hawke Labor Government set up the Higher Education Contributions Scheme (HECS)^[3], which was developed by economist and lecturer at the Australian National University, Bruce Chapmanand championed by Education Minister John Dawkins (see Dawkins Revolution). Under the original HECS, a $1,800 fee was charged all university students, and the Commonwealth paid the balance. A student could defer payment of this HECS amount (in which case it was called a HECS debt) and repay the debt through the tax system, when the student's income reached a certain level. As part of the reforms, Colleges of Advanced Education entered the University sector by various means.

In 1996, the new Howard Coalition Government, while otherwise retaining the HECS system, created athree-tier HECS fee structure. Fees were charged on the basis of the perceived value of courses. Courses considered to have most likelihood of generating higher income for students in the future (eg.Law and Medicine) were the most expensive and those least likely to generate higher income (eg.Nursing and Arts) were the least expensive. At the same time, HECS charges increased by an average of 40%. Universities were permitted to create full-fee places on which they could charge full up-front fees to students who missed out on a HECS place.

[edit]2005/6 reforms

In 2005 the Commonwealth government deregulated university fees, permitting universities to increase fees by a maximum of 25%.

As part of the changes, from 2007, HECS places became known as Commonwealth supported places (CSP). A student in a CSP is only entitled to study for a maximum of 7 years full-time (16 years part-time) at CSP rates. This is known as Student Learning Entitlement (SLE). After that period the student must take either a post-graduate FEE-HELP load (if available) or study at full-fee rates.

The HECS debt became a pre-2005 debt, while HECS-HELP referred to a post-2005 debt. HECS-HELP (formerly HECS) maintains the same principles as HECS. If a student receives a HECS-HELP loan, the Commonwealth government pays the loan amount directly to the higher education provider on behalf of the student.

An alternative option is FEE-HELP (formerly PELS). FEE-HELP provides eligible fee-paying students with a loan to cover their postgraduate 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.^[4]

When a student has used up the SLE, he or she 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 because the student must pay the costs upfront, resulting in 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.

The discount for voluntary repayments of existing HECS debt was reduced from 15% to 10% at the start of 1st January 2005.^[5][6]