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Graduates earning $46,000 forced to start paying off student debt as new law goes into effect

A new law change going into effect today will force more than 130,000 Australians to start paying off their student debts earlier. 


Graduates earning $45,881 will have to start making payments towards their loans after the Higher Education Loan Program’s repayment threshold was lowered from $51,957.  

This means those with the minimum salary will be paying one per cent of their taxable income on tuition fee repayments, which works out at a minimum of $459 a year. 

Meanwhile, grads earning over $134,573 will have to pay ten per cent.   

The move has been supported by economists who deemed the law change necessary in order to tackle the nation’s outstanding student debt which as of last year has risen to $62billion. 

‘It’s become quite a serious budget problem,’ University of Canberra economist Lewis told the Canberra Times. 

‘The system is already quite generous compared to say the US. That being said, a single person renting on their own or with kids will find it tough.’ 

ANU graduate Zoe Tulip said she is now concerned over whether or not she can secure a good job and pay off her debts.

‘I took on this debt because I thought it was going to get me a better job but now it better be a great job,’ she told the publication. 

‘There’s less time to make myself secure.’  

When the deferred student loan program was introduced in 1989, under Labor prime minister Bob Hawke, graduates didn’t start paying back their debt until they earned an average salary.

In today’s money, graduates weren’t paying off their loans until they earned more than $83,500.

Now those earning less than Australia’s median salary – effectively putting them in the bottom half of workers – are repaying student loans. 

The threshold was dramatically reduced in 1997, when John Howard was in his first term as Liberal prime minister.

Almost 2.7million Australians now have a student debt, which stands at an average of $20,000.

But Professor Bruce Chapman, who in 1988 designed Labor’s original Higher Education Contribution Scheme, said asking graduates earning $46,000 a year to start paying off their student debt was fairer than demanding more subsidies from taxpayers.

‘The only way you can keep the subsidies low is to have a relatively low threshold,’ the economist and Australian National University academic told Daily Mail Australia earlier this month. 

The former HECS program, now known as HELP, replaced a costly system known as free education, which Gough Whitlam’s Labor government had introduced in 1974.

Professor Chapman had a message for left-wing student activists campaigning for the return of free education.

‘I think the word ignorant comes to mind,’ he said. 

‘The taxes being paid for it were coming from a percentage of people who didn’t know where a university was. 

‘Basically, you’re giving lifetime advantages at some taxpayer expense.’

Professor Chapman said those activist left-wing students also misunderstood Karl Marx, the German philosopher and revolutionary who founded the ideal of communism.

‘If they were good socialists, they would read Karl Marx on this who basically said it is so unfair that the proletariat is, through their taxes, supporting the bourgeoisie,’ he said. ‘Karl’s got it right.’ 

In an 1875 letter to a left-wing German political party, Marx argued free tertiary education for the rich was unequitable.

‘If … higher education institutions are also “free”, that only means in fact defraying the cost of education of the bourgeoisie from the general tax receipts,’ he said in the Critique of the Gotha Program. 

Under existing arrangements, TAFE students in some trade courses still have to pay upfront fees as undergraduate university students are able to defer repaying their loans. 

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