The federal government has announced plans to change the student debt scheme, which could see borrowers save hundreds of dollars per year.
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00:00Several changes are being proposed and this is very much part of the federal government's
00:07increasing focus on cost of living as we grow ever closer to the next federal election due
00:13in May of next year.
00:16This particular package is the latest in a string of changes to the HECS system and the
00:22government says it won't be the last change they seek either.
00:27By way of detail, firstly, this will reduce the size of repayments graduates have to make
00:34per year to chip away at their HECS or HELP debt.
00:39This will also see a move to a new system of calculating those repayments which is referred
00:46to as a marginal repayment system.
00:49It will operate similarly to the income tax thresholds where each person's repayment
00:56is calculated based on their income and is set at a certain rate per dollar over that
01:02threshold.
01:03Secondly, graduates won't have to start repaying their student loans until they begin to earn
01:10more.
01:11That's going to shift from $54,000 as in the minimum income needed before you have
01:17to start paying back.
01:18That's going to be increased to $67,000.
01:23These changes would come in from next year.
01:27The government is seeking to introduce legislation which would implement those changes in the
01:35new year before Parliament as well, so before we go to the election.
01:42The Education Minister, Jason Clare, says this is good news for a lot of students, some
01:48three million, some of whom are doing it particularly tough.
01:52Nobody will be worse off under this.
01:55It'll mean that everybody earning up to $180,000 a year will pay less every year in their student
02:02debt repayments.
02:03What this will do is help people who are just starting out, who've just finished uni, who've
02:07just finished TAFE, and they've now got to pay the bills, pay the rent, or are saving
02:11for a mortgage, or they're trying to start a family, and this will just take a bit of
02:15the pressure off and help a lot of young Australians right across the country.
02:20$680 per year in terms of not having to pay that much off their loans, there still will
02:28be requirements to repay judged on income.
02:32For somebody who is earning $70,000 a year, they will see a reduction in the amount they
02:38have to repay in the order of $1,300.
02:43If a graduate is earning $80,000 a year, they'll have a reduction of $850.
02:49These changes apply to people earning up to $180,000 a year, and as I said, the government
02:57is planning on introducing these reforms to parliament in the new year.