David Feeney (Victoria, Australian Labor Party, Parliamentary Secretary for Defence) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

I seek leave to have the second reading speech incorporated in Hansard.

Leave granted.

The speech read as follows—

The Higher Education Support Amendment (FEE-HELP Loan Fee) Bill 2010 amends the Higher Education Support Act 2003 (the Act) to implement the Government’s decision to increase the loan fee from 20 percent to 25 percent for undergraduate courses. This is a reintroduction of a previous bill with similar provisions passed by the House on 15 March 2010, which lapsed when Parliament was prorogued on 19 July 2010.

The amendment will give effect to the recommendation of the Bradley Review of Australian Higher Education to increase the loan fee for FEE-HELP for fee paying undergraduate students to 25 per cent.

An increase in the loan fee will enable the Government to recover more of the taxpayer subsidised cost of providing FEE-HELP loans. 

Tuition fees for full fee-paying undergraduate courses can be substantially higher than for Commonwealth supported places, as the Government sets the maximum student contribution amount applying to Commonwealth supported places.  When the level of HELP debt rises significantly, the taxpayer-funded subsidies for the loans also substantially increases.

Even with a five per cent increase in the loan fee, the conditions of the Government’s FEE-HELP scheme continue to provide an extremely favourable income contingent loan for students.

Commercial loan schemes charge interest rates, require security, and must be repaid according to the loan terms regardless of a person’s income.  By contrast, students’ HELP debts to the Government are merely indexed annually to maintain their value in real terms and eligibility for the loan is not means tested nor does it require security.  Further, students are not required to begin repayments until their income reaches the minimum repayment threshold of $44,912 (in 2010-11).  If students do not repay their loan, the Government meets the cost.

The increase in the FEE-HELP loan fee will apply to FEE-HELP debts incurred on or after 1 January 2011 in relation to units of study whose census dates are on or after 1 January 2011.

The majority of students will not be affected by this change which will impact only on undergraduate students who choose to use FEE-HELP for their tuition fees in a fee paying place.

Debate (on motion by Senator Feeney) adjourned.