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Policy Paper3 Support for studentsA new suite of loans will be introduced called the Higher Education Loan Programme (HELP), which will incorporate the current HECS scheme and two new loan schemes: Fee Paying HELP (FEE-HELP) to help students who are paying full fees in public and eligible private higher education institutions, and Overseas Study HELP (OS-HELP) to help students who wish to study for part of their degree overseas. Debts accrued under FEE-HELP and OS-HELP will be indexed to the CPI plus
3.5 percentage points each year for a maximum of ten years, before returning
to indexation by the CPI. FEE-HELP will replace the Postgraduate Education
Loans Scheme (PELS), Open Learning Deferred Payment Scheme (OLDPS) and the
Bridging for Overseas- Trained Professionals Loan Scheme (BOTPLS). 3.1 HECS–HELPFrom 2005, institutions in receipt of Commonwealth supported places will determine their own student contribution level for each course they offer within ranges set by the Commonwealth. This will allow institutions greater flexibility and promote a more diverse higher education system. As student contribution levels will vary between courses and institutions, students will have a greater range of options to pursue a higher education in Australia. There will be no minimum levels for student contributions. Institutions will be able to set student contribution levels as low as they wish. Australian citizens and holders of Australian permanent humanitarian visas will be able to pay their contribution through HECS-HELP. Table
C: Student Contribution Levels
(a) Projected HECS rates for 2005 based on current indexation estimates. (b) Maximum student contributions will be set at 30 per cent higher than estimated HECS contribution rates for 2005, except for teaching and nursing where the maximum will be set at the estimated HECS rates for that year. Universities will set student contribution levels. The new ‘National Priorities’ Student Contribution band will be used to attract students to courses that are a national priority for the Government (see Section 2.7). Commencing from 2005, fees for students in Commonwealth supported places in areas of teaching and nursing will not increase and may in fact go down at some institutions. The student contribution range will initially be $0–$3,854. The maximum student contribution payable for these disciplines will be similar to that which would have applied if the current HECS schedule had been maintained. The disciplines covered by this band may change as national needs evolve. HECS-HELP will remain the fundamental mechanism through which students in Commonwealth supported places can pay this contribution. HECS-HELP will continue to be a loan that is indexed by Consumer Price Index movements to maintain its real value but is otherwise interest free. Deferred income contingent repayment arrangements will continue but with an increased repayment threshold. This will ensure that students are able to participate in higher education even if they prefer or are unable to pay their contribution at commencement of studies. Each student’s contribution will depend on the individual subjects that he or she chooses and the fee charged by the institution. The average contribution that students make towards the cost of their education can be calculated by determining the actual value of student contributions through HECS-HELP as a percentage of the total funding for educational costs provided by the Commonwealth to higher education institutions. Using this calculation, under the current arrangements students contribute on average 26.1 per cent towards the cost of their education. Under the higher education reforms, the average student contribution on an equivalent basis is expected to rise to approximately 26.8 per cent in 2005. The Commonwealth will continue to provide around three quarters of the cost of undertaking higher education, as indicated in Table D.
Table D:
Student Contributions as a percentage of Total Commonwealth funding for
higher education institutions
(a) Total Commonwealth funding (estimate for 2005) provided directly to higher education institutions. (b) Total actual student contributions (estimate for 2005 based on modelled impact of partial fee deregulation) taking into account the subsidies inherent in the HECS-HELP programme. The financial position of most graduates on lower incomes will be improved through a change to the minimum repayment threshold from $24,365 (2002–03 financial year) to $30,000 (2005–06 financial year) and the removal of the two bottom repayment bands. The maximum repayment rate will increase to 8 per cent where income exceeds $64,999. The discount for up front payment will be reduced from 25 per cent to 20 per cent, and the bonus for voluntary repayments will be reduced from 15 per cent to 10 per cent. There will be no bonus for voluntary repayments on FEE-HELP or OS-HELP loans. Current HECS students and HECS students commencing in 2004 (both full-time and part-time) will be able to study under the current HECS contribution levels until the end of 2008, unless they discontinue their enrolment. Students continuing study into 2009 will be required to study under the new HECS-HELP student contribution levels. All students, including FEE-HELP and OS-HELP students, will be subject to the same repayment conditions that apply to the new HELP loans from 2005. The new higher repayment threshold, the increase in the maximum repayment rate and changes to discounts for up front and voluntary repayments will apply to existing HECS debts from 2005. All payments for student fees under HELP, as well as up front HECS-HELP contributions and payments for full fee paying places made by students will to be paid to universities. The Commonwealth does not receive any of this money. In addition, the Commonwealth currently pays approximately $100 million in subsidies to universities for the discounts on up front HECS payments. 3.2 Fee Paying HELP (FEE-HELP)Students paying full fees for an undergraduate course do not currently have access to an income contingent loan scheme. This means that a qualified student who is offered a full fee paying place but who does not have the means to pay up front or can not take out a commercial loan can not access a place. This is inequitable. The new FEE-HELP scheme will offer eligible students an income contingent loan facility to pay their undergraduate or postgraduate fees in courses in public or eligible private institutions. Students will be able to access a loan up to the amount of the full tuition fee charged for the course they are undertaking, to a total limit of $50,000. For students at private higher education institutions to have access to FEE-HELP, the institution must be listed as a higher education institution on the Australian Qualifications Framework Register; be subject to audit by the Australian Universities Quality Agency; and meet additional quality assurance and reporting requirements as specified by the Commonwealth. FEE-HELP will encourage lifelong learning and the upgrading and acquisition of new skills. It will also help to remove barriers to national and personal investment in education, training and skills development. Enrolments in undergraduate full fee paying courses in both public and private institutions are likely to increase. This will further help to reduce the level of unmet demand for higher education places and assist students to access their preferred course or institution. To the extent that students choose to enrol in a fee paying course of their preference using FEE-HELP rather than take up a Commonwealth supported place, they will free up a HECS-HELP place for another student. Debts accrued under FEE-HELP will be indexed to the CPI plus 3.5 percentage points each year for a maximum of ten years, before returning to indexation by the CPI. If a student has an existing HECS or HECS-HELP debt and a FEE-HELP and/or OS-HELP debt, compulsory repayments will be directed to the HECS or HECS-HELP debts first. FEE-HELP will commence in 2005, absorbing the Postgraduate Education Loan Scheme (PELS), Open Learning Deferred Payment Scheme (OLDPS) and Bridging for Overseas-Trained Professionals Loan Scheme (BOTPLS). Current PELS students, and PELS students commencing in 2004, will continue to have access to PELS until they discontinue or complete their course or until the end of 2008, whichever comes first. Under FEE-HELP, students studying through Open Universities Australia (OLA) may borrow up to the full amount of the tuition fee charged by OLA. 3.3 Overseas Study HELP (OS-HELP)Current rates of Australian students studying overseas are very low compared with international standards. Expanding Australian students’ experiences of the social, economic and political systems of other countries is crucial in building Australia’s capacity to engage in the international market and to establish relationships with foreign people and organisations. Such skills are invaluable in terms of Australia’s trade, foreign relations and security interests. OS-HELP will assist eligible full-time undergraduate students in Commonwealth supported places at public higher education institutions to study abroad for one or two semesters of their degree programme. It will offer students loans of up to $5,000 (in 2005 dollars) per semester to finance their overseas study. OS-HELP will assist students with travel and living expenses while overseas as the majority of students undertaking formal exchange programmes are exempt from tuition fees. Tuition costs will only apply where the student is not studying under a formal exchange programme and in such cases would need to be met by the student. Students would not be eligible to apply for a loan until they had successfully completed the first year of their course and the loan would not cover overseas study undertaken during the final year of a course. Debts accrued under OS-HELP will be indexed to the CPI plus 3.5 percentage points each year for a maximum of ten years, before returning to indexation by the CPI. In 2005, a total of 2,500 OS-HELP loans will be available, increasing to a total of 10,000 loans per year by 2008. Loans will be distributed between eligible institutions for allocation to students.
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Any comments or
queries should be sent to:
highered@dest.gov.au
Department of Education, Science and Training
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