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There are several changes in store for tertiary students in the next couple of years, announced as part of the federal government’s 2014–15 Budget. Primarily, these changes relate to tuition fee structures and government contributions, tuition repayments and government allowances. We discuss how the Budget is likely to affect you.
University tuition fees
The federal government has announced that it will deregulate (uncap) university tuition fees, which means that public universities will be able to set undergraduate tuition fees as they see fit. Currently, tuition fees for students holding a government-subsidised Commonwealth Supported Place (CSP) fall into one of three bands, with universities able to charge a student contribution up to a set maximum (up to $6044, $8613 or $10,085 for a full-time study load per year, depending on the field of study).
The government will also reduce its subsidy of tuition costs by an average of 20 per cent from 2016. This will see CSP students contribute a larger share to tuition fees, in addition to bearing the brunt of potentially higher fees across the board.
The new funding arrangements will affect all students who accept an offer after 13 May 2014, but fee structures will not officially change until 1 January 2016. This means that commencing students will continue to be charged under the old system until this date. Students who currently hold a CSP will not be affected by these changes and will continue to study under the existing fee structure until they graduate or 31 December 2020, whichever comes first.
HELP loan repayments
The Higher Education Loan Program (HELP) will continue, allowing students to defer their tuition fees, but a new minimum repayment threshold will be introduced for the 2016–17 financial year. For the 2014–15 financial year, students begin repaying HECS-HELP, FEE-HELP and VET FEE-HELP loans once they begin earning above $53,345. In July 2016, this threshold will be lowered to $50,636 and require students to repay their debt earlier. With the median graduate salary currently sitting at around $52,000 (according to Graduate Careers Australia’s most recent graduate survey), this will see a large number of students repaying their debts as soon as they enter the workforce. Those falling into the first income bracket — estimated as being between the threshold and $56,264 — will commence repaying their HELP debt at a two per cent repayment rate. Interest on HELP loans will also change and will be tied to the government bond rate rather than to inflation, meaning graduates could pay up to six per cent interest each year in place of the current 2.9 per cent.
In addition, the government will scrap the HECS-HELP benefit. Currently, graduates who take up employment in the fields of education, early childhood, nursing, maths and science are eligible for reduced HECS-HELP repayments. The benefit will be discontinued for periods of employment after 30 June 2015.
Greater access to Commonwealth Supported Places
In 2016, all government-approved higher education providers will be able to provide Commonwealth Supported Places (CSPs) to eligible students. Currently, CSPs are only offered by public universities at undergraduate level and in some postgraduate courses, and in a limited range of fields at private universities, private higher education providers and TAFE institutes that deliver undergraduate degrees.The availability of CSPs will also be extended to include all accredited diplomas, advanced diplomas and associate degrees — at present, most of these courses require students to pay full fees.
Government loans for apprentices
Apprentices will now be eligible for loans of up to $20,000 over four years through the Trade Support Loans scheme. This loan will cover the costs of learning a trade, with loans repaid once apprentices reach the repayment threshold for HELP loans.
Government allowances for young people
In a bid to ensure young people are ‘earning or learning’, the government has outlined a number of changes to income support. This will affect Youth Allowance and Newstart from 1 January 2015. Currently, young people are eligible for the Newstart allowance at the age of 22. This will increase to 25, meaning that Youth Allowance recipients will no longer be shifted to the higher Newstart payment rate when they turn 22.
Further, young people under the age of 30 will need to demonstrate that they have been seeking work for six months before they will be eligible to receive income support. Once approved to receive payments, recipients will be required to participate in the Work for the Dole scheme for a minimum of 25 hours per week. These changes will affect existing and new recipients of the allowances.