Sussan Ley (Farrer, Liberal Party, Shadow Minister for Childcare and Early Childhood Learning) Share this | Hansard source

I rise to speak on the Higher Education Support Amendment (FEE-HELP Loan Fee) Bill 2010 which seeks to increase the amount of FEE-HELP debt for fee-paying undergraduate students from 20 per cent to 25 per cent of the FEE-HELP loan. As this bill is virtually identical to the Higher Education Support Amendment (FEE-HELP Loan Fee) Bill 2010 fee that was considered by the 42nd Parliament, I will only speak briefly on this today. The Higher Education Support Act 2003, part 3.3.3, administers the FEE-HELP scheme, which allows domestic students enrolled in a course to access assistance of up to $80,000 to pay for fees, or $100,000 for courses in veterinary science, dentistry and medicine. The estimated financial impact for this bill provides for a commencement date of 1 January 2011. The adjustment to the cost of the measure for this commencement date is $7 million fiscal balance over the period 2010-11 to 2013-14.

FEE-HELP currently extends to undergraduate and postgraduate studies at private higher education providers in the vocational and education training sector, including TAFE, for diplomas and advanced diplomas and to some students doing postgraduate studies at university. All types of HELP schemes are subsidised by the government as students do not pay a commercial rate of interest on the loan and there is no interest paid on the debt, though it is subject to indexation. There is a significant cost to the Commonwealth as some student debt is never repaid due to death of the debtor; relocation overseas; or the income threshold, which triggers repayment by the debtor, never being reached. To partly recover that subsidy, the government currently adds 20 per cent to the value of the FEE-HELP loan. The loan fee is designed to compensate the Commonwealth for the lending amounts that are in most instances higher than those loaned to Commonwealth supported students and therefore in many instances can take longer to repay.

The review into higher education chaired by Professor Bradley recommended an increase in the FEE-HELP loan fee from 20 per cent to 25 per cent, which was based on modelling done by Professor Bruce Chapman, the architect of the HECS scheme. I note that this measure and the modelling by Bruce Chapman has attracted concern from the sector about the appropriateness of increasing the loan fee to 25 per cent, given that the loan fee for OS-HELP and VET FEE-HELP students is 20 per cent. The anomalies between the different HELP schemes have been noted by the coalition and we have advocated for a thorough review of all of the schemes to iron out any inconsistencies. Nevertheless, it is indisputable that there is a need for the Commonwealth to recover more of the subsidised cost and reduce the pressure on the taxpayer. For this reason we will not oppose this legislation. I thank the Main Committee.

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