Graduates living overseas could be forced to pay back student loans
If the Australian Government was to act on recommendations from the recent Grattan Institute report, Doubtful Debt: the rising cost of student loans, it could save up to $800 million dollars a year by 2017 if it recovered outstanding student loans from people living overseas and deceased estates.
According to the report the total amount of 'doubtful debt', that is loans that are not expected to be repaid, is likely to be high as $13 billion by 2017. Graduates in performing arts and visual arts and crafts are the least likely to repay their student loan in full found the report.
Andrew Norton, Grattan Institute's Higher Education Program Director said that the student loan programs have been a great success for 25 years but as student numbers increase and new loan schemes are established the Higher Education Loan Program (HELP) is getting expensive.
"A few targeted reforms could radically improve HELP's finances and free up money for teaching and research, without creating hardships for students, graduates or their families," he said.
The report recommends that graduates living overseas repay a flat annual amount until their HELP debt is cleared and that the Government not write off HELP Debt in deceased estates when the estates is worth more than $100,000.
"HELP's repayment system was never designed for lending on a scale we see today," Mr Norton said. "With these modest reforms, we can achieve the goals of HELP at a much lower cost."