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As a general rule, all students who attend Australian tertiary education institutions are charged higher education fees. However, government loans and subsidies are in place to relieve the costs of tertiary education in Australia.
Some students are supported by the national government, known as the Commonwealth government. These students are only required to pay a part of the cost of tuition, called the "student contribution", while the Commonwealth pays the balance; and some Commonwealth supported students are also able to defer payment of their contribution as a HECS-HELP loan. Other domestic students are full fee-paying (non-Commonwealth supported) and receive no other direct government contribution to the cost of their education. Some domestic students in full fee courses can obtain a FEE-HELP loan from the national government up to a lifetime limit of $112,134 for medicine, dentistry and veterinary science programs and $89,706 for all other programs. Australian citizens and in some case of overseas professionals completing bridging studies in order to be accredited -permanent residents are able to obtain interest free loans from the government under the Higher Education Loan Programme (HELP) which replaced the Higher Education Contribution Scheme (HECS). As of October 2013 the amount of money owed to the Australian Government is 23 billion Australian dollars.
HELP is jointly administered by the Department of Education, Employment and Workplace Relations (DEEWR) and the Australian Taxation Office (ATO).
In addition, qualified students may be entitled to Youth Allowance or Austudy Payment to assist them financially while they are studying. These support payments are means and assets tested. Further assistance is available in the form of scholarships.
Overseas students are charged fees for the full cost of their education and are ineligible for any loans from the Commonwealth, but may apply for international scholarships.
In 1940, the Curtin Labor Government saw a need for the country to increase the number of university graduates and for more civil and military research. To do this, it dramatically increased the number of scholarships it offered to enter university and allowed women to apply for these scholarships (they were previously exclusive to men). The Menzies Liberal Government also supported and extended the ability of ordinary Australians to attend university.
In the 1960s, the Menzies Government encouraged and funded the establishment of new universities to cater for increasing demand. These universities were built in outlying suburbs and offered special research scholarships to encourage students to undertake postgraduate research studies. Many of the universities that were established under this scheme are members of Innovative Research Universities Australia.
In 1967, the Government created a category of non-university tertiary institution (called College of Advanced Education (CAE)) that would be funded by the Commonwealth. These CAEs were easier to access and cheaper to attend than the traditional university, while delivering many university-equivalent Bachelor degrees.
During the early 1970s, there was a significant push to make tertiary education in Australia more accessible to working and middle class Australians. The Whitlam Labor Government abolished university fees on 1 January 1974.
In 1989, the Hawke Labor Government set up the Higher Education Contributions Scheme (HECS), which was developed by economist and lecturer at the Australian National University, Bruce Chapman and championed by Education Minister John Dawkins (see Dawkins Revolution). Under the original HECS, an $1,800 fee was charged to all university students, and the Commonwealth paid the balance. A student could defer payment of this HECS amount (in which case it was called a HECS debt) and repay the debt through the tax system, when the student's income reached a certain level. As part of the reforms, Colleges of Advanced Education entered the University sector by various means.
In 1996, the new Howard Coalition Government, while otherwise retaining the HECS system, created a three-tier HECS fee structure. Fees were charged on the basis of the perceived value of courses. Courses considered to have most likelihood of generating higher income for students in the future (e.g. Law and Medicine) were the most expensive and those least likely to generate higher income (e.g. Nursing and Arts) were the least expensive. At the same time, HECS charges increased by an average of 40%. Universities were permitted to create full-fee places on which they could charge full up-front fees to students who missed out on a HECS place.
In 2005 the Commonwealth government deregulated university fees, permitting universities to increase fees by a maximum of 25%.
As part of the changes, from 2007, HECS places became known as Commonwealth Supported Places (CSP). A student in a CSP is only entitled to study for a maximum of 7 years full-time (16 years part-time) at CSP rates. This is known as Student Learning Entitlement (SLE). After that period the student must take either a post-graduate FEE-HELP load (if available) or study at full-fee rates. From 1 January 2012, SLE has been abolished and students can continue to study for more than 7 years full-time or equivalent part-time in Commonwealth Supported Courses.
The HECS debt became a pre-2005 debt, while HECS-HELP referred to a post-2005 debt. HECS-HELP (formerly HECS) maintains the same principles as HECS. If a student receives a HECS-HELP loan, the Commonwealth government pays the loan amount directly to the higher education provider on behalf of the student.
An alternative option is FEE-HELP (formerly PELS). FEE-HELP provides eligible fee-paying students with a loan to cover their postgraduate fees. This option is only available for post-graduate students attempting an eligible post-graduate course. In 2012, the FEE-HELP lifelong limit is $89,706, and $112,134 for students studying dentistry, medicine or veterinary science.
Prior to 2012, when a student had used up SLE, he or she could enrol on a full-fee basis. Full-fee courses are relatively expensive because the student must pay the total cost or if eligible, defer the fee on FEE-HELP, resulting in a significantly larger debt than a HECS-HELP debt for the student contribution portion of a Commonwealth Support Course.
FEE-HELP courses are available at a post-graduate level (and occasionally for some undergraduate full-fee places) however they are not available at every institution or in every course. The only remaining option is a full-fee place paid upfront.
From 1 January 2012, the voluntary repayment discount has been reduced to 5% for payments made to the ATO to reduce an existing accumulated HELP debt.
The Commonwealth Government determines the number and allocation of Commonwealth supported undergraduate places with each public higher education providers each year through the Commonwealth Grant Scheme (CGS). A Commonwealth supported place is a higher education place for which the Commonwealth Government makes a contribution to the higher education provider towards the cost of a student's education. The student only makes a contribution towards the cost of education, known as the student contribution. Commonwealth supported places are available to citizens of Australia and New Zealand and Australian permanent residents.
The majority of Commonwealth supported places are managed through the tertiary admissions centre in each state or territory (although universities make the selections, deciding which students they will make offers to):
The student contribution varies between courses. It is based upon the expected earnings following a students' graduation, not the cost of providing the course. Higher education providers can set the student contribution level for each unit of study, up to a maximum level set by the Government. It is said that, due to government underfunding of universities, universities almost always charge the highest level allowable.
|Band||Curriculum Areas||Post- 1 Jan 2010 CSP students||Pre- 1 Jan 2010 CSP students||Pre- 1 Jan 2005 HECS students|
|2010 Maximum Contribution|
|Post-1 Jan 2005||Post-1 Jan 1997||Pre-1 Jan 1997|
|National Priority||Mathematicsª, Statisticsª, Scienceª,||$0 – $4,429||$0 – $4,162||$0 – $4,077||$0 – $3,061|
|Band 1||Education^, Nursing^, Humanities, Behavioural science, Social studies, Foreign languages, Visual and Performing arts, Nursingª, Educationª, Clinical Psychology||$0 – $5,310||$0 – $5,201|
|Band 2||Computing, Built Environment, Health Sciences, Engineering, Surveying, Agriculture||$0 – $7,567||$0 – $7,412||$0 – $5,807|
|Band 3||Law, Dentistry, Medicine, Pharmacy, Veterinary science, Accounting, Administration, Economics, Commerce||$0 – $8,859||$0 – $8,677||$0 – $6,798|
|Notes: ^ removed 2010 reform, ª Added 2010 reform,numbers or figures - Deprecated|
An eligible student can either pay the entire student contribution and receive a 10% in-kind contribution (~9.1% discount) (was 20% in-kind (17% discount) prior to 2012) or defer payment of the contribution through a HECS-HELP loan. It is possible to defer payment of some of the contribution and pay part upfront. In cases of part payment, a 10% bonus (was 20% prior to 2012) is received on the amount paid. Only Australian citizens and permanent humanitarian visa holders are eligible for HECS-HELP loans or the up-front 10% bonus on the payment amount. Students who are New Zealand citizens or Australian permanent residents must pay the entire contribution upfront and receive no HECS discount.
Students who do not receive a Commonwealth supported place may obtain a fee-paying place, as long as their ATAR tertiary admissions rank or other qualifications exceed a certain minimum. Most postgraduate courses do not have Commonwealth supported places available and therefore all these students are fee-paying. Fee-paying students are charged the full cost of their course, with no Commonwealth contribution.
Some fee-paying students can obtain loans under the Higher Education Loan Programme, called FEE-HELP loans, to cover all or part of their fees. This is available to Australian Citizens, New Zealand Citizens and Permanent Humanitarian Visa Holders. Undergraduate students who obtain these loans are charged a 20% loan fee on top of the amount borrowed. This does not apply to post graduate courses. Students are able to borrow a lifetime maximum FEE-HELP loan of $112,134 for medicine, dentistry and veterinary science programs and $89,706 for all other programs (adjusted for inflation). In 2005, FEE-HELP loans replaced the Open Learning Deferred Payment Scheme (OLDPS), the Postgraduate Education Loan Scheme (PELS) and the Bridging for Overseas-Trained Professionals Loan Scheme (BOTPLS).
OS-HELP is a loan scheme to assist some undergraduate domestic students to undertake some, but not all, of their course of study overseas. Students are able to obtain a loan of $5,299 for every six months, but can only receive a total of two loans throughout their lifetime. Unlike other loans in the HELP, the loan amount is paid directly to the student and the terms for the loans are set out by the tertiary providers.
As in the FEE-HELP loan scheme, a 20% fee applies on the amount borrowed. This 20% 'administration fee' will be removed for OS-HELP loans received after 1 Jan 2010.
HELP debts do not attract interest, but are instead indexed to the Consumer Price Index (CPI) on 1 June each year, based on the annual CPI to March of that year. The indexation rate applied on 1 June 2006 was 2.8% and 3.4% on 1 June 2007. Indexation applies to the part of the debt that has been unpaid for 11 months or more. Thus, indexation is calculated on the opening HELP debt balance on 1 July of the previous year plus any debt incurred in the first half of the current year (usually for first semester courses) less any compulsory and voluntary repayments, with bonus. Any HELP debt incurred on second semester courses (usually determined in June) will not be subject to indexation until the next year. After indexation, the new balance is rounded down to a whole dollar amount.
HELP account debtors can make voluntary repayments. These repayments attract a 5% bonus (reduced from 10% from January 2012) for repayments over $500. If the remaining debt is less than $500 the bonus still applies on repayment of their balance of the debt. As making voluntary repayments does not exempt the person from compulsory repayments, if the person intends to pay off the total debt voluntarily, it is financially advantageous for them to do it before lodging the tax return. This will attract the 5% bonus on the repayment, and there would be no balance on the debt to which the compulsory repayment provisions can apply. Better still, if the voluntary repayment is made before the indexation date of 1 June, the avoiding of the indexation adjustment is an additional bonus. Even factoring in the 5% bonus on voluntary repayments, many people elect not to pay off their debt in advance of the required repayments because it still works out to be probably the cheapest loan someone will ever receive.
If a person with an accumulated HELP debt dies, any compulsory repayment included on their income tax notice of assessment relating to the period prior to their death must be paid from their estate, but the remainder of their debt is cancelled.
HELP debts are administered by the Australian Taxation Office and will be repaid compulsorily over time through the taxation system. If the HELP Repayment Income (HRI) of a person with a HELP debt exceeds a certain threshold, which for the 2007/08 financial year is $39,825, a compulsory payments will be deducted from the person's tax for the year. To work out the HRI, the ATO will add back to the person's taxable income any net rental loss claimed against that taxable income and add fringe benefits and exempt foreign income received, which have not been included in the taxable income. Unlike marginal tax rates, the repayment rate applies on the full HRI, so that a person with a HRI of $39,500 in the 2007/08 tax year would not have to make any compulsory HELP repayment, but a person with a HRI of $40,000 would make a payment of $1,600. This is 4% of the HRI (not taxable income or the debt balance) of $40,000. The compulsory repayment amount cannot exceed the balance of the HELP debt.
The rates for compulsory repayment for the 2010/11 financial year, also compared with previous years, are:
|HELP Repayment Income (HRI) compulsory repayment 2006-2014|
|HRI 2005/06||HRI 2006/07||HRI 2007/08||HRI 2008/09||HRI 2009/10||HRI2010–11||HRI2011–12||HRI2012–13||HRI2013–14||Repayment Rate|
|Below $36,185||Below $38,149||Below $39,825||Below $41,595||Below $43,151||Below $44,912||Below $47,196||Below $49,096||Below $51,309||Nil|
|$36,185–$40,306||$38,149-$42,494||$39,825-$44,360||$41,595–$46,333||$43,151–$48,066||$44,912–$50,028||$47,196–$52,572||$49,096–$54,688||$51,309-$57,153||4% of HRI|
|$40,307–$44,427||$42,495-$46,938||$44,360-$48,896||$46,334–$51,070||$48,067–$52,980||$50,029–$55,143||$52,573–$57,947||$54,689–$60,279||$57,154-$62,997||4.5% of HRI|
|$44,428–$46,762||$46,839-$49,300||$48,897-$51,466||$51,071–$53,754||$52,981–$55,764||$55,144–$58,041||$57,948–$60,993||$60,280–$63,448||$62,998-$66,308||5% of HRI|
|$46,763–$50,266||$49,301-$52,994||$51,466-$55,322||$53,755–$57,782||$55,765–$59,943||$58,042–$62,390||$60,994–$65,563||$63,449–$68,202||$66,309-$71,277||5.5% of HRI|
|$50,267–$54,439||$52,995-$57,394||$55,323-$59,915||$57,783–$62,579||$59,944–$64,919||$62,391–$67,570||$65,564–$71,006||$68,203–$73,864||$71,278-$77,194||6% of HRI|
|$54,440–$57,304||$57,395-$60,414||$59,916-$63,068||$62,580–$65,873||$64,920–$68,336||$67,571–$71,126||$71,007–$74,743||$73,865–$77,751||$77,195-$81,256||6.5% of HRI|
|$57,305–$63,062||$60,415-$66,485||$63,069-$69,405||$65,874–$72,492||$68,337–$75,203||$71,127–$78,273||$74,744–$82,253||$77,752–$85,564||$81,257-$89,421||7% of HRI|
|$63,063–$67,199||$66,486-$70,846||$69,406-$73,959||$72,493–$77,247||$75,204–$80,136||$78,274–$83,407||$82,254–$87,649||$85,565–$91,177||$89,422-$95,287||7.5% of HRI|
|$67,200 and above||$70,847 and above||$73,960 and above||$77,248 and above||$80,137 and above||$83,408 and above||$87,650 and above||$91,178 and above||$95,288 and above||8% of HRI|
It is also possible to make voluntary payments to further reduce the debt. Until 31 December 2004 voluntary payments over $500 earned a 15% bonus, from 1 January 2005 this was reduced to 10% and from January 1, 2012 this was reduced to 5%.