Yesterday’s Budget was a bit different for me – since I’ve been the students spokesperson for the Greens, each Budget has delivered cut after cut to student support. Last year we saw the Government crackdown on overseas borrowers and limit student allowances for older learners. In 2012, there were even bigger changes, including removing access to student allowances for postgraduate students, increasing the repayment threshold for student loan borrowers, and removing the voluntary repayment bonus.
This year students were saved from any of these massive cuts, but it was still a pretty bleak Budget for students.
Top of my list of disappointments is their decision to continue the freeze on the repayment threshold for student loans. What that means is that all graduates with a student loan who earn more than $19,084 ($384 gross a week), have to start paying their loan back at a rate of 12%.
This is a real burden on many graduates, particularly those on a low-income and those with families. It’s important to remember that a large proportion of those paying off a student loan are also parents – nearly half of all young couples with children have student loan debt.
It used to be that this was threshold was lifted annually, in line with inflation. But now it’s at such a low level that graduates have to start paying off their student loans when they earn less than someone working full-time for the minimum wage .
When you compare it to what happens overseas, you can clearly see how unreasonable this is. In Australia, for example, graduates don’t have to start repaying their loans until they earn over $48,000, and they have progressive repayment rates that start at only 4%. In the UK, the income threshold is £21,000.
We also think the repayment rate is far too high and shouldn’t be applied across the board – instead we think that the repayment rate should be progressive, based on your income. This would mean that graduates who could afford to would be able to pay their loans off faster, but it wouldn’t put the squeeze on those who couldn’t afford it.