The Government had a rare higher education Senate victory this week, passing various amendments to the HELP loan scheme.

These include a series of changes to HELP repayment thresholds. Most of the political attention went to the initial repayment threshold, below which no repayment is required. It will drop from the current $52,000 to just under $46,000 in 2019-20. At that point, debtors will have to repay 1 per cent of their entire income.

In principle, I support this step in the direction of better aligning HELP with other government income support thresholds. This 2016 Grattan report supported a lower initial threshold.

Unfortunately, another key recommendation of that report, of consistent percentage increases between each threshold at which the repayment rate increases, was not strictly followed.

For most of the higher thresholds, each is 6 per cent higher than the one before it. But there is a 15 per cent gap between the first and second thresholds.

Combined with starting the repayment percentage at just 1 per cent,  this radically changes the nature of the threshold reform. It is not now something that we can assume will significantly alter HELP doubtful debt.

One intention of the original Grattan proposal was to move debtors more quickly through the repayment rates.  This was partly to recover more HELP debt before female full-time labour force participation drops from their late 20s, as shown in chart 1 below.

Chart 1: Female bachelor degree graduate labour force status, 2016

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