Faster repayments assure better results

In Budget 2012, the government will be focused on rebalancing overall spend in tertiary education between expenditure on student support and investment in tuition and research.

We have one of the most generous student support systems in the world.

Rebalancing it a little will free up some money that we reinvest in the quality of tertiary education we provide, and help our overall fiscal position.

We are committed to interest-free student loans but we are determined to reduce the write-off. Since coming into government (in November 2008), we have reduced it from 49 cents in each $1, down to 45 cents. We intend to get it down over time to 40 cents in the dollar and these changes will help.

Faster repayments

We would require graduates and ex-students to pay off their student loans faster, so that we can invest more in the next generation of students.

This involves increasing the repayment rate by 2c in the dollar from 10c to 12c for each dollar of income above $19,084 per annum.

We are also intending to cancel the voluntary repayment bonus, as that is not creating the increase in repayments we were hoping for and we now have other priorities for expenditure.

That will save around $12 million a year.

We will also introduce some measures to start tackling the blow-out in the cost of student allowances from $385 million in 2007/08 to $620 million in 2010-2011, due in part to policy settings of the previous government.

We will focus student allowances on the initial years of study and assist low-income families who need it most.

We are likely to freeze the parental income threshold for the next four years at its current rate and ensure the current limit of 200 weeks access to student allowances is consistently applied, and towards the early years of study.

In practice, this means removing access for masters and PhD students and for long courses beyond the first 200 weeks of study. Those students will continue to have access to interest-free loans.

The student support changes in Budget 2012 will provide a one-off positive revaluation of the student loan book of around $250 million and $60 to $70 million of annual savings, which will be largely reinvested across the wider tertiary system.

Further details on new investments in the sector will be announced in the Budget.