Education Legislation Amendment (2020 Measures No. 1) Bill 2020


On 11 June 2020 the Minister for Education, Dan Tehan, introduced the Education Legislation Amendment (2020 Measures No. 1) Bill 2020 (the Bill) to the House of Representatives. 

The main purpose of the Bill is to give effect to a six‑month exemption from FEE‑HELP loan fees announced on 12 April 2020 as part of the Higher Education Relief Package (the relief package) in response to the COVID-19 pandemic.

The other elements of the relief package do not require legislation. A loan fee exemption for VET Student Loans (VSL) was also included, but has already been given effect by the VET Student Loans Amendment Rules (No. 1) 2020, made under the VET Student Loans Act 2016 (VSL Act) on 8 May 2020.

The Bill also includes a number of other higher education and vocational education and training (VET) measures, which are briefly discussed under other measures at the end of this FlagPost.

The loan fee exemption

FEE‑HELP is part of a suite of income-contingent higher education student loans administered under the Higher Education Support Act 2003 (HESA) that allow eligible students to borrow to cover certain study costs, usually course fees. Repayments are required through the Australian Taxation Office (ATO) once the borrower’s income reaches a minimum threshold.

FEE‑HELP and VSL are the only student loans that attract loan fees. No loan fee is applied to the most commonly used student loan, HECS-HELP, which is available to students whose course fees are subsidised through Commonwealth supported places (CSP), predominantly domestic undergraduate students at public universities (most Australian universities are public, in that they are founded or recognised under state, territory or Commonwealth Acts, and have financial, governance and public service responsibilities under those Acts).

Currently, under subsection 137-10(2) of HESA, a loan fee of 25 per cent applies when a person uses FEE‑HELP to pay course fees for an undergraduate degree at a non-university higher education provider or an Australian branch of an overseas university. Schedule 4 of the Bill proposes to amend subsection 137-10(2) with the effect that the 25 per cent loan fee will not apply to units of study with a census date between 1 April 2020 and 30 September 2020.

According to the relief package frequently asked questions webpage, borrowers will not need to apply for the exemption. Instead, it ‘will be automatically applied when your loan is submitted by your provider to the Department of Education, Skills and Employment’.

Effect of the proposed changes

The effect of the proposed changes will be to reduce the debt incurred by students in the six months from 1 April 2020.

The Bill does not propose to make any changes to the income-contingent nature of the loans, or the repayment thresholds or rates. Therefore, it will not have any immediate effect on borrowers’ repayment responsibilities.

Financial impact

The Explanatory Memorandum to the Bill states (p. 4) that the loan fee exemption is the only measure in the Bill with financial implications, costing an estimated $53 million in fiscal balance terms from 2019–20 to 2023–24.

Stakeholder reaction

The loan fee exemption has been welcomed by the peak bodies representing independent higher education providers, whose undergraduate students normally incur the FEE-HELP loan fee.

The Independent Tertiary Education Council Australia, which has long advocated for removal of the loan fees, welcomed the temporary loan fee exemption both when it was first announced, and when the Bill was introduced.

Independent Higher Education Australia also welcomed the announcement, and recommended to the Senate Select Committee on COVID-19 that the measure be extended for a further two years, with a view to abolishing it permanently.

Other measures

A number of other tertiary education funding measures are included in the Bill, and briefly set out here.

Expanding the use of the Unique Student Identifier

A Unique Student Identifier (USI) has been in use in the VET sector since 2015. Each non-exempt student is assigned a single USI for life, which is linked to an electronic record of their Australian VET study. The Student Identifiers Amendment (Higher Education) Act 2020 extends the USI to the higher education sector by requiring that from 1 January 2023, a person must have a USI in order to be awarded a higher education qualification.

Schedule 1 of the Bill proposes amendments to HESA and the VSL Act with the effect of requiring students to have a USI as a condition of receiving Commonwealth support in the form of a CSP, HELP loan, or VSL—this will apply to new students from 1 January 2021 and all students from 1 January 2023.

Changes to support the administration of the HELP loan limit

In 2020 a combined HELP loan limit was introduced for VSL, FEE-HELP, and HECS-HELP, by the Higher Education Support Legislation Amendment (Student Loan Sustainability) Act 2018 and the Education and Other Legislation Amendment (VET Student Loan Debt Separation) Act 2018. The 2020 limit is $152,700 for medicine, dentistry and veterinary science courses leading to initial registration, or eligible aviation courses, and $106,319 for all other courses. Loan fees do not count towards the loan limit.

Schedule 2 of the Bill deals with the recovery of amounts over the loan limit, where this is the result of a student having more than one Commonwealth Higher Education Student Support Number (CHESSN). The Explanatory Memorandum advises that this occurred due to ‘imperfect automated data matching’, an issue that the Minister’s second reading speech states has been addressed through technological improvements, to ‘prevent this issue occurring in the future’. The Bill proposes to allow the Secretary (currently of the Department of Education, Skills and Employment) to validate loans that should not have been provided (due to exceeding the loan limit) and allow the affected students to repay the excess loan amount through the usual ATO repayment process.

Schedule 3 proposes to amend HESA to make it consistent with the VSL Act in respect to the way student loan debts are incurred, so as to avoid any inconsistencies in the treatment of debts incurred towards a student’s HELP loan limit.

Other amendments

Schedule 5 proposes to amend HESA to make minor administrative changes, including adding a definition of a course of study in aviation, and updating the ‘University of Western Sydney’ to its new name, Western Sydney University.

FlagPost

Flagpost is a blog on current issues of interest to members of the Australian Parliament

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