Should HELP be extended to vocational education students?

Yesterday the Prime Minister said the government would extend income contingent loans to students studying for ‘high-level’ vocational skills (diploma-level voc ed courses already have HELP loans in some cases). Various concerns have been expressed in today’s paper.

One of my concerns is that this would be overly costly for taxpayers if the existing HELP loan scheme is used. This is because the repayment system is designed for graduate level income, not the incomes of people with vocational qualifications. It is not entirely clear what Gillard is proposing, but in 2009 the median annual income of someone with a certificate III or IV qualification was $45,600. In that year the threshold for repaying a HELP loan was $43,151.

The median is all workers, so the median for new workers would be lower (though in these lines of work, income tends to plateau early). This suggests that there would be large numbers of slow or non-repayers, with consequent interest and bad debt costs for taxpayers.

  1. Good point. Though I wonder if, given the much smaller debt incurred, the threshold could reduced. From your link, a 4% repayment rate (the minimum for the other scheme) on any income over $25,000 would be $1000. Which should cover the fees(or at least did at the start of this decade when I went to tafe).

    If the scheme is expanded, I hope the Govt also considers expanding HECS/HELP to cover textbooks and perhaps some basic student costs. Like the tafe fees, the money involved is usually not huge sums, but it does all come at the start of the semester, leaving many students in a difficult financial position for the first month or so.

  2. Andrew, It’s 4% over $43,000 (now $47,000). If it was $25K repayment would not be a problem.

    I don’t support including fiddly small sums like textbooks; it would need a vast bureaucracy to manage it. However, with some fee deregulation it would be easy enough for education providers to bundle textbooks with other academic services.

  3. The easiest way to include relatively small sums like textbooks would probably be for the HELP scheme to issue an EFTPOS-style card which can only be used at certain stores, like University bookshops.

  4. I think it would be dangerous to allow text books to be lumped into a HELP loans as it’s a recipe for inflation by textbook makers – at a time when technology (and the changing nature of courses) is making textbooks less relevant and desirable.

    Be better to go with Andrew’s suggestion to let the Uni’s bargain hard to force prices down on bulk discounts (or just increase Youth Allowance).

  5. There is now a Youth Allowance lump sum to pay for textbooks.

  6. *tips hat*

  7. “is making textbooks less relevant and desirable”

    Curiously, at least in Aus, students want courses that follow textbooks more and more. I’m sure some would be happy with lip-sincing for lectures. I also don’t see the problem with text-book inflation for most courses — there is so much competition in most areas it’s hard to see how it would happen.

  8. Andrew is spot on with this. Repayment is a massive issue….and the buggers don’t want to stop it at tafes. they also want to do farmer hand outs, general welfare payments and more on contingent loans….clazy !

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