Australian government caves in on student loan limits

Australia’s government has acceded to a backbench revolt and softened its proposal to saddle students with lifetime borrowing limits.

The government has amended its own legislation to cap borrowing at A$104,440 (£56,730) for students in most disciplines, and at A$150,000 for those studying medicine, dentistry or veterinary science.

Instead, students’ loan balances will now be made “renewable”. This will allow them to continue borrowing above the limits as long as they repay enough money to reduce their outstanding debts below those caps.

The amendment puts into practice a surprise recommendation of a Senate committee that, although it is dominated by MPs from the ruling Coalition, demanded the change in a report on the legislation earlier this month.

The bill has now cleared the House of Representatives, despite the Labor opposition’s move to stop parliament considering it “because it attacks students and would undermine the fairness of Australia’s world-class student loans scheme”.

While Labor opposes the borrowing limits, it is particularly incensed by the bill’s principle measure of reducing the repayment threshold – the income level at which former students must start repaying their debts – from about $A55,000 to A$45,000.

With the Greens also fiercely opposed, the legislation faces a difficult passage in the Senate, where the government will have to win the support of nine of the 11 cross-bench senators.

The bill’s fate could be determined as early as 28 March if room can be found to debate it in the Senate’s schedule. If not, the next opportunity to consider it will be in early May.

The government was given a preview of the difficulties it can expect during a debate in the House of Representatives on Monday. Minor party MP Rebekha Sharkie indicated that she would support the bill as long as the lifetime loan limit was made “replenishable”.

However, Victorian independent Cathy McGowan said that the changes would have a “negative impact” on her community, which was already afflicted with “appalling statistics for young people accessing tertiary education”. She said the higher education attainment rate in her electorate was only slightly over half the Victorian average.

The proposal to cap student borrowing was linked to the government’s decision to freeze funding for undergraduate courses at 2017 levels for two years, a move that did not require parliamentary approval.

john.ross@timeshighereducation.com