As I expected, there has been comment (here, here, or here) about my release of a report on HELP student loan fees at the same time as I am on a government higher education policy advisory panel.
Due to the panel consuming my time for the last couple of months, the loan fee report has appeared later than originally intended. But other than that the report’s release follows a plan developed a year ago to complete reports on two weaknesses in HELP’s finances, the thresholds for repayment and interest costs. They are companion reports for our report on doubtful debt and recovery of HELP debt from deceased estates in 2014.
Loan fees are not new, and nor is my support for them something I suddenly arrived at after being appointed to the panel. I said in response to the proposed Pyne reforms that rather than abolishing loan fees we should extend them. What this week’s report does is work through in more depth whether interest subsidies are necessary to income contingent loan schemes (no); the relative merits of real interest, hybrid real interest and CPI indexation, and loan fees (loan fees better); and arrive at a method for setting a loan fee rate (likely interest costs over the life of HELP loans). It’s the detail that is appearing now, not the broad recommendation to use loan fees.
When the government asked me to be on the advisory panel I said I could only do it if I could also meet my existing Grattan commitments. They agreed to this. The panel is providing private advice to the minister and the department. It is a different situation from a review with a final report I need to agree with my panel colleagues and which the government will publicly accept or reject. So while the timing is not ideal, the loan fee report does not pre-empt other people’s decisions.