THE federal government is considering collecting unpaid student debts from deceased estates in a move that could prove a deterrent for seniors considering later life learning options.
The talk follows cost-saving measures introduced last year, when Labor supported government legislation to remove the 10 per cent up-front payment discount for tertiary students.
Last year’s budget also moved to collect HELP repayments from graduates living overseas – another measure recommended in the 2014 Grattan Institute report, which raised the prospect of debt collection from deceased estates.
The report said “doubtful debt” for government funded courses was expected to reach $13 billion by 2017. It included debt incurred by graduates, mostly women, who spent long periods earning below the repayment threshold because of caring duties, and debts incurred by older people who started university degrees.
In 2012 there were 6000 people aged over 60 enrolled in tertiary courses eligible for government assistance loans.
Grattan Institute higher education analyst Andrew Norton said ending the HELP write-off for deceased estates worth more than $100,000 would save up to $800 million a year, mostly from higher income households where one breadwinner had returned to work part-time after having children.
“This is definitely something worth doing,” he said. Mr Norton said the loan scheme existed to ensure people did not have up-front fees and protect them from financial hardship. “It should not be treated as a back-door way of getting a free education via the current deceased estate write-off.”
He said the system should not deter people who genuinely needed to retrain, but might encourage people studying out of interest to make choices about their spending.
“If retraining is successful, the loan should be paid off before death in the normal way,” Mr Norton said.
“If the course is just out of interest then that’s fine, but the student will have to think about how much they value that compared to passing on more to their children or other estate beneficiaries, just as they would for any other purchase.”