Tuesday, 25 May 2021
Higher Education Support Amendment (Extending the Student Loan Fee Exemption) Bill 2021; Second Reading
I'm delighted to speak in support of this bill, the Higher Education Support Amendment (Extending the Student Loan Fee Exemption) Bill. The higher education sector is a sector that I am very familiar with. I was a university student when HECS was first introduced. I was a university student when the two first private universities in Australia opened, Bond University and Notre Dame university. I was working in universities and in the sector all throughout the late 1990s and into the early 2000s, and I am familiar with all of the changes which have occurred in this sector over that time period.
There's a lot of similarity between those on our side of the chamber and those on the other side of the chamber as to valuing education and the importance that education provides in giving people an opportunity to learn new things, to actually be able to go out into the world with more knowledge and to change their lives. There is a difference, and I do absolutely refute all of the arguments that this side does not support higher education. This side does support higher education, and this side actually supports there being real choice and real opportunity for students to study.
FEE-HELP, when it was first introduced in 2003, becoming effective in 2005, was introduced to allow domestic students undertaking studies in a full-fee-paying course to access a loan scheme which was very similar, albeit not identical, to the HECS-HELP scheme. It is currently utilised by approximately 30,000 domestic students studying in Australia, and the majority of these are studying at small, private higher education providers. FEE-HELP, when it was first introduced—and I do remember it being introduced—was an innovative and welcome introduction into the higher education sector in Australia as it opened up choice to all of those students who wanted to study at private higher education providers.
Prior to the introduction of FEE-HELP, there were very limited opportunities for those students who wanted to study in these sorts of organisations to obtain government loans. There were a couple of government loans which were available for post-graduate courses, but these were limited. It meant that those students who were seeking to undertake their studies outside of a public university—that is, exercise their choice and go against the grain of going to a public university—were often required to borrow money, frequently at commercial rates, from retail lenders. Needless to say, the fact that these students, in choosing to go a provider of their choice, having to borrow at commercial rates from commercial lenders, acted as a real dampening effect on choice for many students. It also provided a handbrake on the growth and development of private higher education providers. As I said before, the majority of these aim to be small, niche and focused providers, catering to identified areas of study.
FEE-HELP has changed over time—for example, the limits on how much can be borrowed under FEE-HELP have changed—but one thing which has been consistent throughout all of that time is the imposition of a loan fee on students who access FEE-HELP to pay for their studies. This was originally set at 20 per cent. It was increased to 25 per cent in 2011, and this loan fee which is placed on FEE-HELP is the chief differentiator between FEE-HELP and HECS-HELP. With HECS-HELP, there is no loan fee; with FEE-HELP, there is a loan fee.
This particular bill does two things. The first thing it does is extend one of the COVID-19 measures put in place by this government last year. Under the previous changes, an exemption from the FEE-HELP loan fee was provided for domestic undergraduate fee-paying students for units of study with census dates from 1 April 2020 to 30 September 2020. This was later extended by another bill to 30 January 2021, and this particular bill tonight now extends the exemption for units of study with census dates from 1 April 2020 to 1 December 2021. This bill also changes the FEE-HELP loan fee back to 20 per cent for units with a census date on or after 1 January 2022. This measure provides domestic higher education undergraduate students seeking FEE-HELP loans with an exemption from the requirement to pay the 20 per cent loan fee for units of study with census dates within the eligible period, thereby reducing the overall financial burden on these particular students. This provides an incentive for those students who have been financially affected during COVID-19 to continue or to commence their studies in 2021, and this in turn supports those higher education providers to continue to deliver the high-quality education which will be essential to Australia's economic recovery from the COVID-19 pandemic.
There are currently over 100 private providers who meet the strict requirements to offer FEE-HELP to their students. These providers are found across Australia and include the wonderful Engineering Institute of Technology on the border of my electorate, in Western Australia. As noted at the outset, most of these providers are not huge. The majority of them are actually not-for-profit providers, and the number of total students enrolled in them is small: 30,000 students compared with the approximately one million domestic students studying at Australian universities. But these 30,000 students and these private providers are a vital part of the higher education landscape in Australia, and they offer considerable choice. On the whole, they offer an outstanding quality of education to those who choose to study at them. The results of student surveys from students who undertake their studies that these providers provide are often greatly higher than students studying at other institutions.
I would note here that, in voicing my support for the temporary exemption and reduction of the FEE-HELP to 20 per cent beyond 1 January 2022, I do believe that we should go further and we should get rid of the loan fee on FEE-HELP all together. We should make these loans subject to the same indexation increases as apply to HECS-HELP, and that should be the cost of both FEE-HELP and HECS-HELP.
As I understand it, the loan fee was originally introduced to act as a risk premium against the debt not expected to be repaid. The FEE-HELP loan fee was implemented to assist in managing the cost of extending the HELP program to students studying at private providers and to ensure that the program would be sustainable into the future. It was considered that the government's exposure to a higher level of 'do not expect it to be repaid' was going to be greater with FEE-HELP loans and that the sum that was going to be needed to be repaid was going to be higher. However, since its introduction in 2003 and in light of changes to the higher education help scheme since it was first introduced, we now have 15 years of data. I'm firmly of the view that this original justification for putting a loan fee on FEE-HELP now needs to be re-examined to determine, in the first case, whether the level of debt incurred under FEE-HELP continues to be significantly larger—if, indeed, it ever was—and, secondly, to determine whether or not the 'do not expect to repay' is in fact any higher. It is now time that we could analyse this data to see if that original justification for putting the loan fee onto FEE-HELP is actually warranted.
This is not about private providers. This is not about lining the pockets of some people who are running expensive private higher education facilities. As I said, the majority of higher education providers are in fact not-for-profits. This is about providing real choice to students. I know from my experience working in the university sector that, when students are faced with two options—one of which is to go down a standard path and take out a HECS HELP loan without a loan fee or to go to another institution which they might actually be more attracted to and which might suit their mode of studying more and which might be smaller or might have the course which is specifically relevant and interesting to them—if they're faced with the possibility of an additional 20 per cent impost on what they're paying, that acts as a real disincentive. I know this. I've seen it. It happens.
I believe this bill is excellent. I know I am a member of the government, but I do urge this government to actually commission the research that is necessary to determine whether the imposition of that loan fee is still justified, because we do want higher education to be open to students and we do want to create those pathways. But we also want there to be real choice and differentiation in the higher education world, because that is the way that our students of the future will be able to find a place which suits them best, which actually helps them to learn in the best way that is applicable to them. Not every person fits the standard model of institution. Not everybody suits being taught in a particular way. People learn in different ways. People thrive in different environments. We want to make sure that we have a higher education landscape in this country that has a range of providers, so that our students of the future have real choice, that they can go somewhere where they will flourish, where they will learn and where they can go out and the world will be open to them because of how and where they have studied. So I am very happy to speak in support of this bill.