Student Loan Tax Hikes Raise Student Debt Burden

Independent Tertiary Education Council Australia (ITECA)

The Australian Government's recently announced student debt reduction initiative falls short of real and genuine reform and fails students. While announcing this reduction for existing debts, the Government decided to retain the 20% tax that is applied to VET Student Loans and FEE-HELP loans for higher education students. In doing so, the Australian Government's announcement missed an opportunity to support the education and training choices being made by students, according to the Independent Tertiary Education Council Australia (ITECA), the peak body representing independent skills training, higher education and international education providers.

At a $16 billion cost to taxpayers, the Government's proposed reduction on existing debts will reduce the balance of all existing student loan debts by approximately one-fifth, benefiting around three million Australians across HELP, VET Student Loans, Australian Apprenticeship Support Loans, and other income-contingent loan schemes.

"While this initiative will provide debt relief, with a greater focus on students in high-debt fields such as law, dentistry and medicine, it fails to address the core issues facing future students studying with many independent skills training and higher education providers, this being that they will continue to pay the 20% student loan tax," said Troy Williams, ITECA Chief Executive.

The 20% student loan tax, referred to by federal bureaucrats as a "loan fee", is levied by the Australian Government on the loan amount for students in courses where there is no subsidy at independent Registered Training Organisations (RTOs) and also for all students with loans at most independent higher education institutions.

"For most current and future students with independent tertiary education providers, their debts will continue to be higher than they need to be as the 20% student loan tax remains in place," Mr Williams said.

Too many people cannot access government-funded places to study with independent RTOs and higher education providers and have to borrow to undertake study. ITECA argues that the 20% student loan tax compounds this insult to students.

"The most egregious aspect of Australia's student loan system is that the Australian Government burdens most students attending independent tertiary education providers with a 20% student loan tax," Mr Williams said. The Australian Government's announcement regarding the one-fifth reduction in current student debts fails students. "It's regrettable that with the recent Australian Government announcement on student loan debts, no action was taken to remove the 20% student loan tax," Mr Williams said.

ITECA continues to advocate for student loan reform, calling for removing the Student Loan tax from both the VET Student Loans program and FEE-HELP loans in higher education, as outlined in the ITECA Federal Election Manifesto. This reform is essential to support future students and ensure a fair and equitable student loan system for all Australians.

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