Students to save hundreds of dollars per year under proposed changes to HECS-HELP loans

The federal government has announced plans to change the student debt scheme, which could see borrowers save hundreds of dollars per year.

Transcript

00:00Several changes are being proposed and this is very much part of the federal government's

00:07increasing focus on cost of living as we grow ever closer to the next federal election due

00:13in May of next year.

00:16This particular package is the latest in a string of changes to the HECS system and the

00:22government says it won't be the last change they seek either.

00:27By way of detail, firstly, this will reduce the size of repayments graduates have to make

00:34per year to chip away at their HECS or HELP debt.

00:39This will also see a move to a new system of calculating those repayments which is referred

00:46to as a marginal repayment system.

00:49It will operate similarly to the income tax thresholds where each person's repayment

00:56is calculated based on their income and is set at a certain rate per dollar over that

01:02threshold.

01:03Secondly, graduates won't have to start repaying their student loans until they begin to earn

01:10more.

01:11That's going to shift from $54,000 as in the minimum income needed before you have

01:17to start paying back.

01:18That's going to be increased to $67,000.

01:23These changes would come in from next year.

01:27The government is seeking to introduce legislation which would implement those changes in the

01:35new year before Parliament as well, so before we go to the election.

01:42The Education Minister, Jason Clare, says this is good news for a lot of students, some

01:48three million, some of whom are doing it particularly tough.

01:52Nobody will be worse off under this.

01:55It'll mean that everybody earning up to $180,000 a year will pay less every year in their student

02:02debt repayments.

02:03What this will do is help people who are just starting out, who've just finished uni, who've

02:07just finished TAFE, and they've now got to pay the bills, pay the rent, or are saving

02:11for a mortgage, or they're trying to start a family, and this will just take a bit of

02:15the pressure off and help a lot of young Australians right across the country.

02:20$680 per year in terms of not having to pay that much off their loans, there still will

02:28be requirements to repay judged on income.

02:32For somebody who is earning $70,000 a year, they will see a reduction in the amount they

02:38have to repay in the order of $1,300.

02:43If a graduate is earning $80,000 a year, they'll have a reduction of $850.

02:49These changes apply to people earning up to $180,000 a year, and as I said, the government

02:57is planning on introducing these reforms to parliament in the new year.