House of Representatives

Revised Explanatory Memorandum

(Circulated by authority of the Minister for Education and Training, Senator the Honourable Simon Birmingham)

Outline

The purpose of this Bill is to improve the sustainability of the Higher Education Loan Program (HELP) and debt recovery of the Student Financial Supplement Scheme (SFSS) by:

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setting new repayment thresholds for HELP from 1 July 2018, starting with a lower minimum repayment threshold of $45,000 with a one per cent repayment rate, with a further 17 thresholds and repayment rates, up to a top threshold of $131,989 at which ten per cent of income is repayable

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aligning the indexation of the HELP repayment thresholds to the Consumer Price Index (CPI) instead of Average Weekly Earnings (AWE)

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bringing repayment thresholds for SFSS managed by the Social Services portfolio in line with the HELP repayment thresholds from 2019-20, and making changes to the order of repayment of student loan debts with consequential implications for Student Start-up Loans and Trade Support Loan debt repayment

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retaining the current three-tier repayment threshold for SFSS, with the existing indexation, for 2018-19

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setting FEE-HELP loan limits for 2019 for FEE-HELP loans, VET FEE-HELP loans and VET Student Loans

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introducing the combined HELP loan limits for HECS-HELP loans, FEE-HELP loans, VET FEE-HELP loans and VET Student Loans from 1 January 2020, and

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allowing for renewable HELP balances, beginning with HELP debt repayments made during the financial year 2019-20 re-crediting HELP balances from 2020.

Schedule 1 of the Bill makes changes to HELP repayment arrangements. It replaces the current repayment threshold and repayment rates with new ones, including a new minimum repayment threshold and repayment rate plus additional repayment thresholds and rates. From 1 July 2019, repayment thresholds including the minimum repayment income, will be indexed using the CPI rather than AWE. The repayment thresholds for SFSS will also be brought into line with the HELP repayment thresholds from 2019-20 and the current three-tier repayment threshold for SFSS retained with the existing indexation for 2018-19.

Schedule 2 of the Bill makes changes to the order of repayment of various student loan debts. From 2019-20, when the HELP threshold will start to apply to student debts under the Social Security Act 1991 and the Student Assistance Act 1973, debts from the SFSS will be repaid after HELP debts are discharged, rather than concurrently.

Schedule 2A of the Bill introduces a new loan limit to how much students can borrow under FEE-HELP, VET FEE-HELP and VET Student Loans to cover their tuition fees from 1 January 2019. The limit is $150,000 for students studying medicine, dentistry and veterinary science courses, and $104,440 for other students.

Schedule 3 of the Bill brings HECS-HELP under a combined HELP loan limit from 1 January 2020, but also enables students who make repayments to their HELP debts to continue accessing HECS-HELP, FEE-HELP and VET Student Loans (the VET FEE-HELP scheme was closed to new students at the end of 2016).

Financial Impact Statement

This Bill implements the Government's revised higher education package announced in December 2017 as part of the Mid-Year Economic and Fiscal Outlook.

The measures in Schedule 1 of the Bill (changes to HELP repayment thresholds and indexation) deliver savings of $345.7 million in fiscal balance terms and $245.2 million in underlying cash balance terms over the forward estimates (2017-18 to 2020-21).

The measures in Schedule 1 of the Bill (changes to SFSS repayment thresholds) and Schedule 2 of the Bill (order of repayment of debts) deliver savings of $32.3 million in underlying cash balance terms over the forward estimates (2017-18 to 2020-21). There is nil impact in fiscal balance terms.

The measures in Schedule 2A and Schedule 3 of the Bill (combined HELP loan limit) deliver a cost of $0.9 million in fiscal balance terms over the forward estimates (from 2017-18 to 2020-21). In underlying cash balance terms, the measures come at a cost of around $14.2 million over the forward estimates.

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Higher Education Support Legislation Amendment (Student Loan Sustainability) Bill 2018

The Higher Education Support Legislation Amendment (Student Loan Sustainability) Bill 2018 (Bill) is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview of the Bill

The Bill is compatible with human rights because, to the extent that it may limit human rights, the limitations are reasonable, necessary and proportionate.

The Higher Education Support Act 2003 (HESA) is the main piece of legislation providing funding for higher education in Australia, providing for Australian Government subsidies and tuition support for students.

The Government introduced a range of measures as part of the December 2017 Mid-Year Economic and Fiscal Outlook to ensure the long-term viability of Australia's higher education sector. The Bill makes amendments to HESA that will improve the sustainability of the Higher Education Loan Program (HELP) by:

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setting new repayment thresholds for HELP from 1 July 2018, starting with a lower minimum repayment threshold of $45,000 with a one per cent repayment rate, with a further 17 thresholds and repayment rates, up to a top threshold of $131,989 at which ten per cent of income is repayable

•

aligning the indexation of the HELP repayment thresholds to the Consumer Price Index (CPI) instead of Average Weekly Earnings (AWE)

•

bringing repayment thresholds for the Student Financial Supplement Scheme (SFSS) managed by the Social Services portfolio in line with HELP repayment thresholds from 2019-20, and making corresponding changes to the order of repayment of student loan debts with consequential implications for Student Start-up Loans and Trade Support Loan debt repayment

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retaining a three-tier threshold for SFSS in 2018-19 using selected thresholds from the Budget Savings (Omnibus) Act 2016

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setting FEE-HELP loan limits for 2019 for FEE-HELP loans, VET FEE-HELP loans and VET Student Loans

•

introducing the combined HELP loan limits for HECS-HELP loans, FEE-HELP loans, VET FEE-HELP loans and VET Student Loans from 1 January 2020, and

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allowing for renewable HELP balances, beginning with HELP debt repayments made during the 2019-20 financial year re-crediting HELP balances from 2020.

Summary of analysis

The measures contained within this package are limited and justifiable. While there is minor potential for some changes to lead to increased costs for some students under HELP, these measures are necessary to support the provision of high quality tertiary education and to continue to provide equitable access for students.

Analysis of human rights implications

The Bill has implications for the following human rights:

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the right to an adequate standard of living - Article 11 of the International Covenant on Economic, Social and Cultural Rights (ICESCR)

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the right to education - Article 13 of the ICESCR

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the right to equality and non-discrimination - Article 26 of the International Covenant on Civil and Political Rights (ICCPR).

Article 11: right to an adequate standard of living

This Bill engages with Article 11(1) of the ICESCR which recognises "the right of everyone to an adequate standard of living...including adequate food, clothing and housing, and to the continuous improvement of living conditions".

There are elements within the Bill that may be perceived as relevant to Article 11, particularly as they may result in increased costs for HELP recipients once they begin earning a sufficient wage. None of these changes will necessitate increased costs for students while they study (unless they are earning income above the threshold while studying), as they will continue to be able to defer their tuition fees though the HELP scheme (until they reach the combined loan limit).

Schedule 1 of the Bill establishes a new minimum repayment threshold for HELP loans of $45,000. In the 2017-18 income year, taxpayers are not required to start paying back their HELP loans until their annual incomes reach $55,874. In the 2018-19 income year, the new threshold at which people will start repaying debts will be $45,000.

The proposed minimum repayment threshold is still above the minimum wage (currently around $36,100 for a full-time worker from 1 July 2017, according to Fair Work Australia). Additionally, at the new minimum repayment threshold, individuals will only pay one per cent of their annual taxable income. This is less than $9 per week, minimising any impacts on individuals' standards of living.

Under HESA, where a person's financial and family circumstances result in them either being exempt or receiving a reduction in their Medicare levy, they are not required to make compulsory HELP repayments for that income year.

As such the measure is reasonable and proportionate to meet the policy goal of ensuring the long term viability of the HELP scheme.

In addition to a change in the minimum repayment amount, Schedule 1 of the Bill establishes a new maximum threshold of $131,989 with a repayment rate of 10 per cent. This will ensure that HELP debtors at the higher end of the income scale repay their debt faster.

The sustainability of HELP is crucial to ensure continued access to higher education. HELP ensures that students do not face upfront costs for their higher education and are able to further their study on the basis of capacity to learn rather than capacity to pay.

Schedule 2 of the Bill changes the order of repayment of various student loan debts. Currently, debts under the SFSS are collected concurrently with HELP debts.

Bringing repayment of the SFSS debts into alignment with new HELP repayment thresholds from 1 July 2019 means that there is a risk of additional repayment burden for affected debtors who also have a HELP debt, as repayments may be higher for these debtors. For this reason, the Bill changes the order of repayment so that SFSS debts are only collectable if there is no HELP liability for that income year. In this way, debtors are relieved of duplicate repayment burden.

Article 12: Right to education

This Bill engages with Article 13(2)(c) of the ICESCR which states that "higher education shall be made equally accessible to all, on the basis of capacity, by every appropriate means, and in particular by the progressive introduction of free education".

Schedule 1 of the Bill will change the way in which HELP thresholds are currently indexed. From 1 July 2019 onwards all HELP thresholds will be indexed at the CPI instead of AWE.

Indexing the HELP repayment thresholds at CPI will ensure the value of the thresholds is maintained in real terms, as the thresholds will increase in line with consumer prices rather than average wages. With AWE being typically higher than CPI, indexation by CPI will slow growth in repayment thresholds, bringing more individuals into the repayment scope over time.

Access to higher education will be maintained through the continued availability of HELP loans. As individuals will commence repayment sooner, it may create the belief that costs are increasing for students, thereby reducing access to higher education. By lowering the repayment threshold, and altering the indexation of the threshold to grow in line with CPI, this measure makes the overall scheme more affordable for Government in the long-term, and does not result in an overall increase in costs for students.

Schedule 2A of the Bill introduces an increase to the current FEE-HELP limit.

This will enable some students to access a higher loan limit than under current arrangements. The new $150,000 loan limit for 2019, for students undertaking medicine, dentistry and veterinary science courses (as defined in HESA) is an increase on the estimated 2019 FEE-HELP limit of $130,552. Students in these courses who had previously reached their FEE-HELP limit will, from 2019, have access to additional funds up to the new $150,000 limit. This will enable them to borrow up to the new limit.

Schedule 3 of the Bill introduces a new, combined, and renewable limit on how much students can borrow under HELP to cover their tuition fees from 1 January 2020. The combined limit will be an indexed amount of the 2019 FEE-HELP limit set in Schedule 2A of the Bill.

By limiting borrowing to a maximum amount that is, firstly, sufficient to support almost nine years of full time study as a Commonwealth supported student and, secondly, can reasonably be repaid within a borrower's lifetime, this measure is consistent with fair and shared access to education.

The loan limit is indexed annually according to CPI, so that it keeps pace with inflation.

The combined loan limit is not retrospective for HECS-HELP loans. From 1 January 2019, all new HECS-HELP borrowing will count towards a student's loan limit. However, no previously incurred HECS-HELP debt will be taken into account. This means that these students' right to education will not be compromised by amounts they have previously borrowed through HECS-HELP while they were Commonwealth supported students.

As FEE-HELP, VET FEE-HELP or VET Student Loans debt were already subject to a limit, any debt already accrued under the existing FEE-HELP limit will be transferred onto the new HELP tuition limit for that student. Any new FEE-HELP, VET FEE-HELP or VET Student Loans borrowing will continue to count towards their combined loan limit.

To the extent that this measure may limit the right to education, these measures are reasonable, necessary, and proportionate to the policy objective of ensuring access to tertiary education for those who cannot afford to pay their tuition upfront. Moreover, the measure could be seen to support and augment the right of access to education by establishing a fiscally responsible student loan scheme. It does not alter the general availability of tuition loan support for higher education and is justified in the context of available resources and the spirit of maximising educational access and inclusion.

Article 26: Right to equality and non-discrimination

This Bill engages with Article 26 of the ICCPR which states that "the law shall prohibit any discrimination and guarantee to all persons equal protection against discrimination on any ground such as race, colour, sex, language, religion, political or other opinion, national or social origin, property, birth or other status".

The measure contained in Schedule 1, the introduction of new HELP repayment thresholds, may be seen as limiting the right to non-discrimination due to disproportionate impacts on women and other low income groups.

The Government currently carries a higher deferral subsidy from demographic groups that tend to have lower incomes. This includes women, individuals in part-time work, or individuals in low paid professions. As a result, some of these individuals, including women, may be making repayments for the first time as a result of the introduction of a lower minimum repayment threshold. Addressing this income inequality, however, is not the role of the higher education loans system.

This measure also introduces additional repayment thresholds for high income earners, who will be required to repay their HELP debts at higher rates. As men are disproportionately represented among high income earners, this aspect of the measure is more likely to affect men.

The new minimum repayment threshold remains above the minimum wage. This ensures that, even with the introduction of lower thresholds, individuals should not fall below a liveable income as a result of their repayment obligations. However, measures have been taken to reduce the effect of these changes on lower income earners. The lower rate of repayment ensures that the requirements on individuals facing repayment obligations for the first time are minimal, at only one per cent of their income.

Additionally, women, individuals in part-time work, or individuals in low paid professions will not face any limitations on their right to access a HELP loan, and therefore higher education courses, as a result of the changed thresholds.

In addition, the inclusion of a renewable HELP loan limit provides scope for all individuals who have made HELP debt repayments during an income year to benefit through re-crediting of their HELP loan balance. This will enable them to pursue further study in order to retrain, change careers, or further specialise in their current profession. This adds an element of flexibility and equality to the HELP scheme that recognises that people often seek to engage in lifelong learning and ensures that they will not be prevented from doing so by the barrier of upfront tuition fees.

Finally, protection for low income earners is maintained by the retention of Medicare levy protections. A person is not liable to make repayments towards their debt if they qualify for a reduced amount of Medicare levy, or if no Medicare levy is payable by that person on the person's taxable income for that year.

The introduction of these new repayment thresholds is necessary to ensure the sustainability of HELP. The introduction of these new thresholds will reduce the time it will take for individuals to repay their HELP debts, thereby reducing the deferral costs of providing HELP loans to students at no real rate of interest. The objective of ensuring the sustainability of the HELP scheme is reasonable, and the measure is proportionate and necessary.

Conclusion

The Bill is compatible with human rights because, to the extent that it may limit human rights, the limitations are reasonable, necessary and proportionate.

Notes on Clauses

Preliminary

Clause 1 - Short title

Clause 1 provides for the Act to be the Higher Education Support Legislation Amendment (Student Loan Sustainability) Act 2018.

Clause 2 - Commencement

Subclause 2(1) inserts a three column table setting out commencement information for various provisions in the Bill. Each provision of the Bill specified in column 1 of the table commences (or is taken to have commenced) in accordance with column 2 of the table and any other statement in column 2 has effect according to its terms.

The table has the effect of providing for the following commencement times:

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sections 1 to 3 and any matters not otherwise covered by the commencement table commence on the day this Bill, once enacted, receives the Royal Assent

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Schedule 1 commences immediately after the commencement of Schedule 1 to the Budget Savings (Omnibus) Act 2016 (which commences on 1 July 2018)

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Schedule 2 commences on 1 July 2019

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Schedule 2A commence on 1 January 2019

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Schedule 3 commences on 1 January 2020.

Clause 3 - Schedules(s)

Clause 3 provides that any legislation that is specified in a schedule is amended or repealed as set out in the applicable items in the schedule and that any other item in a schedule has effect according to its terms.

LIST OF ABBREVIATIONS

Schedule 1 Repayment thresholds

Summary

Schedule 1 of the Bill replaces the current minimum repayment income with a new one of $44,999 and replaces the current repayment thresholds with new ones, including additional repayment thresholds and rates. From 2019-20, the revised HELP thresholds will also apply to SFSS debts under the Social Security Act and the Student Assistance Act. In the 2018-19 income year there will be a transitional year under which repayment thresholds applying to the SFSS will be fixed at three specific repayment thresholds and rates.

Schedule 1 of the Bill also implements new indexation arrangements for HELP repayment thresholds including the minimum repayment amount. From 1 July 2019 HELP repayment thresholds will be indexed using the CPI rather than AWE. This will ensure repayment requirements are adjusted in line with the cost of living. It also streamlines indexation factors used throughout HESA, as all amounts will be indexed by the same factor.

Detailed explanation

Part 1 - General amendments

Higher Education Support Act 2003

Item 1 - Paragraph 154-10(a)

Section 154-10 of HESA provides for the minimum repayment income for an income year, that is, the amount that a person's repayment income must be above before they will be obliged to start repaying their accumulated HELP debts.

Paragraph 154-10(a) currently provides that the minimum repayment income for the 2005-06 income year was $36,184. This amount has since been indexed every year.

This item repeals and substitutes paragraph 154-10(a) to provide that the minimum repayment income for the 2018-19 income year is $44,999.

Item 1 of Schedule 1 to the Omnibus Act repeals and substitutes paragraph 154-10(a) and sets a new minimum repayment income for the 2018-19 income year of $51,956. The amendments made by this item replace the Omnibus Act minimum repayment income change.

Item 2 - Section 154-20 (table)

Section 154-20 contains a table which lists repayment income thresholds and the applicable percentage rates for the compulsory repayment of HELP debts. This item repeals and substitutes the table with the following:

Social Security Act 1991 and Student Assistance Act 1973

Items 3 to 7 - SFSS debts

Currently, SFSS debts are repaid according to different repayment thresholds using a three-tier system where repayment rates are two, three or four per cent of income. SFSS debtors are required to make repayments towards their SFSS debt at the same time as any HELP debt repayment.

The provisions concerning the recovery of SFSS debts are contained in Part 2B.3 (Repayment of financial supplement through taxation system after termination date) of Chapter 2B of the Social Security Act. Equivalent provisions dealing with the recovery of SFSS ABSTUDY debts are contained in Division 6 of Part 4A of the Student Assistance Act.

Section 1061ZZFD of the Social Security Act and Section 12ZLC of the Student Assistance Act describe the current repayment thresholds under which amounts of this SFSS debt are compulsorily payable to the Commonwealth. These thresholds are linked to the HELP repayment thresholds contained in section 154-20 of HESA, but only selectively, as follows:

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more than the minimum repayment threshold but less than the threshold at Item 2 of the table in section 154-20 of HESA (at which two per cent of income is payable

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more than the threshold at Item 2 but less than the threshold at Item 7 of the table in section 154-20 of HESA (at which three per cent of income is payable

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more than the threshold at Item 7 of the table in section 154-20 of HESA (at or above which four per cent of income is payable).

Item 3 repeals section 1061ZZFD of the Social Security Act and substitutes a new section 1061ZZFD.

New subsection 1061ZZFD(1) provides that the amount a person is liable to pay under section 1061ZZEZ of the Social Security Act for the 2019-20 income year or later income years is to be calculated by using the following formula:

In this formula:

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applicable percentage of repayment income means an amount equal to the person's repayable debt for the income year that does not exceed the percentage of the person's repayment income - which is that to be calculated for the income year by using the table in section 154-20 of HESA

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relevant income-contingent loans liability means the total of any amounts the person has to pay under sections 154-1 (liability to repay amounts) or 154-16 (liability of overseas debtors to repay amounts) of HESA in respect of the income year.

New subsection 1061ZZFD(2) provides that, for the purposes of new subsection 1061ZZFD(1), an assumption needs to be made that the reference to the table in section 154-20 of HESA to the person's repayment income is a reference to the person's repayment income within the meaning of section 1061ZZFA of the Social Security Act.

New subsection 1061ZZFD(3) provides that a person is not liable under section 1061ZZFD to pay an amount for an income year if the amount calculated under subsection 1061ZZFD(1) comes to zero or less than zero.

New subsection 1061ZZFD(4) is a transitional provision that only applies with respect to the 2018-19 income year. It provides that the amount a person is liable to pay under section 1061ZZEZ of the Social Security Act for the 2018-19 income year is so much of an amount equal to the person's repayable debt for the income year that does not exceed the percentage of the person's repayment income as per the following table:

Section 1061ZZFE of the Social Security Act requires the Minister to annually publish in the Gazette a notice setting out the minimum repayment income and amounts to be determined as referred to in the second column of items 1 and 2 of the table in section 1061ZZFD (referring to amounts determined as set out in column 2 of items 2 and 7 of the table in section 154-20 of HESA).

Item 5 repeals section 1061ZZFE as it is no longer required. This is because repayment thresholds for 2018-19 are set as above, and repayment thresholds from 2019-20 onwards will be gazetted under section 154-30 of HESA.

Item 4 makes a consequential amendment to paragraph 1061ZZENA(b) to remove the redundant reference to section 1061ZZFE which is repealed by item 5 of this Schedule.

Item 6 repeals section 12ZLC of the Student Assistance Act and substitutes a new section 12ZLC.

New subsection 12ZLC(1) provides that the amount a person is liable to pay under section 12ZK of the Student Assistance Act for the 2019-20 income year or later income years is to be calculated by using the following formula:

In this formula:

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applicable percentage of repayment income means an amount equal to the person's repayable debt for the income year that does not exceed the percentage of the person's repayment income - which is that to be calculated for the income year by using the table in section 154-20 of HESA

•

relevant income-contingent loans liability means the total of any amounts the person has to pay under sections 154-1 (liability to repay amounts) or 154-16 (liability of overseas debtors to repay amounts) of HESA in respect of the income year.

New subsection 12ZLC(2) provides that, for the purposes of new subsection 12ZLC(1), an assumption needs to be made that the reference to the table in section 154-20 of HESA to the person's repayment income is a reference to the person's repayment income within the meaning of section 12ZL of the Student Assistance Act.

New subsection 12ZLC(3) provides that a person is not liable under section 12ZLC to pay an amount for an income year if the amount calculated under subsection 12ZLC(1) comes to zero or less than zero.

New subsection 12ZLC(4) is a transitional provision that only applies with respect to the 2018-19 income year. It provides that the amount a person is liable to pay under section 12ZK of the Student Assistance Act for the 2018-19 income year is an amount equal to so much of the person's repayable debt for the income year that does not exceed the percentage of the person's repayment income as per the following table:

Section 12ZLD of the Student Assistance Act requires the Minister to annually publish in the Gazette a notice setting out the minimum repayment income and amounts to be determined as referred to in the second column of items 1 and 2 of the table in section 12ZLC (referring to amounts determined as set out in column 2 of items 2 and 7 of the table in section 154-20 of HESA).

Item 7 repeals section 12ZLD as it is no longer required. This is because repayment thresholds for 2018-19 are set as above, and repayment thresholds from 2019-20 onwards will be gazetted under section 154-30 of HESA.

Part 2 - Amendments relating to indexation

Higher Education Support Act 2003

Item 8 - Section 140-15

Section 140-15 provides for a definition of the index number for the purpose of calculating accumulated HELP debts. This item repeals section 140-15, which is no longer required as item 16 of this Schedule inserts a new definition of index number into clause 2 into Schedule 1 to HESA.

Item 9 - Subsection 154-25(1)

This item repeals and substitutes subsection 154-25(1), which concerns the method of indexation for the 2006-07 and later income years in respect of minimum repayment income and amounts referred to in the table at section 154-20

New subsection 154-25(1) provides that, for the 2019-20 income year and later income years, the minimum repayment income and the amounts referred to in paragraph (a) of the second column of items 1 to 17 of the table in section 154-20 (see item 2 of this Schedule) are indexed by multiplying the relevant amount for the 2018-19 income year by an amount that is to be worked out by applying the following formula:

The Dictionary at Schedule 1 to HESA defines quarter as meaning a period of 3 months ending on 31 March, 30 June, 30 September or 31 December.

Item 10 - Subsections 154-25(2) and (3)

This item repeals subsections 154-25(2) and (3) which are no longer required due to the repeal and substitution of subsection 154-25(1) by item 9 of this Schedule.

Item 11 - Paragraph 154-30(b)

Section 154-30 deals with publishing indexed amounts. This item omits 'to 9' from paragraph 154-30(b) and substitutes 'to 17'. This is a consequential amendment to item 2 of this Schedule, which inserts a new table at section 154-20 that lists repayment income thresholds and the applicable percentage rates for the compulsory repayment of HELP debts.

Item 12 - Section 198-1 (note 1)

This item omits 'sections 140-10 and 140-15' from note 1 to section 198-1 and substitutes 'section 140-10'. This is a consequential amendment to item 8 of this Schedule which repeals section 140-15.

Item 13 - Subclause 1(1) of Schedule 1 (definition of AWE )

This item repeals the definition of AWE in the Dictionary at Schedule 1. The term AWE is no longer required due to amendments made to section 154-25 by item 9 of this Schedule.

Item 14 - Subclause 1(1) of Schedule 1 (paragraph (a) of the definition of index number )

Paragraph (a) of the definition of index number in the Dictionary at Schedule 1 to HESA provides that, for the purposes of Part 4-1 (indebtedness), it has the meaning given by section 140-15.

This item repeals and substitutes the paragraph (a) definition. Under the new definition, index number for the purposes of Part 4-1 and Part 4-2 (discharge of indebtedness) has the meaning given by clause 2 of Schedule 1. This is a consequential amendment to item 16 of this Schedule.

Item 15 - Subclause 1(1) of Schedule 1 (definition of reference period )

This item repeals the definition of reference period which is no longer required.

Item 16 - At the end of Schedule 1

This item adds a new clause 2 at the end of Schedule 1 to provide for index numbers.

New subclause 2(1) of Schedule 1 provides that, for the purposes of Part 4-1 (indebtedness) and Part 4-2 (discharge of indebtedness), the index number for a quarter is the All Groups CPI Index number - which is the weighted average of the 8 capital cities as published by the Australian Statistician for that quarter.

New subclause 2(2) of Schedule 1 provides that, subject to subclause 2(3) of Schedule 1, if at any time before or after the commencement of clause 2, the Australian Statistician has published or publishes an index number for a quarter and this is in substitution for a previously published index number for the quarter - then the later published index number is to be disregarded.

New subclause 2(3) provides that if, at any time before or after the commencement of clause 2, the Australian Statistician has changed or changes the index reference period for the CPI - then, when later applying this clause, regard is to be given only to the index numbers published in terms of the new index reference period.

Part 3 - Application and transitional provisions

Item 17 - Application of amendments

Subitem 17(1) provides that the amendments made by Part 1 of Schedule 1 apply to the 2018-19 income year and to later income years.

Subitem 17(2) provides that the amendments made by Part 2 of Schedule 1 apply to the 2019-20 income year and to later income years.

Item 18 - Transitional - indexation

Item 9 of Schedule 1 repeals and substitutes subsection 154-25(1) of HESA (concerning indexation of certain amounts).

This item provides that despite anything in the repealed subsection 154-25(1) as it applies to the 2018-19 income year, an amount referred to in paragraphs 154-25(1)(a) or (b) is not to be indexed for the 2018-19 income year.

Schedule 2 Order of repayment of debts

Summary

Schedule 2 of the Bill makes changes to the order of repayment of various student loan debts. From 2019-20, when the HELP threshold will start to apply to student debts under the Social Security Act and the Student Assistance Act, debts from the SFSS will be repaid after HELP debts are discharged, rather than concurrently.

Detailed explanation

Part 1 - Amendments

Social Security Act 1991

Item 1 - Subsection 1061ZVHA(1)

Section 1061ZVHA of the Social Security Act concerns a person's liability to repay amounts of Student Start-up Loan (SSL) debts.

This item repeals and substitutes subsection 1061ZVHA(1). New subsection 1061ZVHA(1) provides that if the person's HELP repayment income for the income year is greater than the minimum HELP repayment income for the income year and, on the preceding 1 June prior to making an assessment of the person's income for the income year, the person had an accumulated SSL debt - then the person is liable to pay, in accordance with Division 3 of Part 2AA.4 of Chapter 2AA of the Social Security Act, so much of their repayable SSL debt for the income year to be calculated by using the following formula:

In this formula:

•

applicable percentage of repayment income means the amount that is the percentage of their HELP repayment income as per the table in section 154-20 of HESA

•

relevant income-contingent loans liability means the total of the following in respect of the income year:

o

the sum of any amounts the person is liable to pay under sections 154-1 (liability to repay amounts) or 154-16 (liability of overseas debtors to repay amounts) of HESA

o

the sum of any amounts the person is liable to pay under section 1061ZZEZ (compulsory repayment of accumulated SFSS debt) of the Social Security Act, or section 12ZK (compulsory repayment of accumulated SFSS debt) of the Student Assistance Act.

Student Assistance Act 1973

Item 2 - Subsection 10F(1) (definition of relevant income-contingent loans liability )

Section 10F of the Student Assistance Act concerns a person's liability to repay amounts of ABSTUDY SSL debt.

This item repeals and substitutes the definition of relevant income-contingent loans liability in subsection 10F(1). Under the new definition, relevant income-contingent loans liability means the total of the following in respect of the income year:

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the sum of any amounts the person is liable to pay under sections 154-1 (liability to repay amounts) or 154-16 (liability of overseas debtors to repay amounts) of HESA

•

the sum of any amounts the person is liable to pay under section 1061ZZEZ (compulsory repayment of accumulated SFSS debt) of the Social Security Act, or section 12ZK (compulsory repayment of accumulated SFSS debt) of the Student Assistance Act

•

any amount the person is liable to pay under section 1061ZVHA (repayment of accumulated SSL debt).

Trade Support Loans Act 2014

Item 3 - Subsection 46(1) (definition of relevant income-contingent loans liability )

Section 46 of the Trade Support Loans Act concerns a person's liability to repay amounts of TSL debts.

This item repeals and substitutes the definition of relevant income-contingent loans liability in subsection 46(1). Under the new definition, relevant income-contingent loans liability means the total of the following in respect of the income year:

•

the sum of any amounts the person is liable to pay under sections 154-1 (liability to repay amounts) or 154-16 (liability of overseas debtors to repay amounts) of HESA

•

the sum of any amounts the person is liable to pay under section 1061ZZEZ (compulsory repayment of accumulated SFSS debt) of the Social Security Act, or section12ZK (compulsory repayment of accumulated SFSS debt) of the Student Assistance Act

•

any amount the person is liable to pay under section 1061ZVHA (repayment of accumulated SSL debt) of the Social Security Act, or section 10F (repayment of ABSTUDY SSL debt) of the Student Assistance Act.

Part 2 - Application provisions

Item 4 - Application of amendments

This item provides that the amendments made by Schedule 2 only apply to the 2019-20 income year and to later income years.

Schedule 2A The FEE-HELP limit

Summary

Schedule 2A of the Bill introduces a new limit to how much students can borrow under FEE-HELP, VET FEE-HELP and VET Student Loans to cover their tuition fees from 1 January 2019. The limit is $150,000 for students studying medicine, dentistry and veterinary science courses, and $104,440 for other students.

Tuition fee-paying students accessing FEE-HELP, VET FEE-HELP and VET Student Loans have always been subject to a lifetime limit on the amount they can borrow. The limit is called the "FEE-HELP limit", which is set out in section 104-20 of the Act. The FEE-HELP limit is indexed on 1 January every year under Part 5-6 of the Act.

The new $150,000 loan limit for students undertaking medicine, dentistry and veterinary science courses (as defined in HESA) is an increase on the estimated FEE-HELP limit of $130,552 for 2019. Students in these courses who had previously reached their FEE-HELP limit will, from 2019, have access to additional funds up to the new $150,000 limit. Apart from annual indexation increases, the loan limit applying to students in other courses remains the same, with a new base amount of $104,440 in 2019.

From 1 January 2020, the FEE-HELP limit will become the HELP loan limit, under amendments made by Schedule 3 to the Bill (see below).

Detailed Explanation

Items 1 and 2 of Schedule 2A to the Bill will adjust the current FEE-HELP loan limit (set out in section 104-20 of the Act) to $104,440, and $150,000 for persons enrolled in medicine, dentistry or veterinary science courses.

Item 3 is a transitional provision that ensures that the new amounts inserted by items 1 and 2 are not also indexed on 1 January 2019 under Part 5-6 of the Act.

Schedule 3 HELP loan limits etc.

Summary

Schedule 3 of the Bill introduces a new combined limit to how much students can borrow under HELP to cover their tuition fees from 1 January 2020, called the "HELP loan limit", and also enables students who have reached that limit to continue accessing HELP loans as they make repayments on their existing HELP debts.

HELP loan limit

The combined HELP loan limit in 2020 will be the previous FEE-HELP limit (set out in the amendments in Schedule 2A - i.e. $150,000 for students studying medicine, dentistry and veterinary science courses, and $104,440 for other students) as indexed for one year.

Schedule 3 to the Bill broadens the existing FEE-HELP limit and FEE-HELP balance to include HECS-HELP loans for courses with census dates on or after 1 January 2020. However, previously accumulated HECS-HELP debt will not be counted. For FEE-HELP, VET FEE-HELP or VET student loans debt already accrued under the existing FEE-HELP limit, the debt will be transferred against the student's new HELP tuition limit, reducing their HELP balance.

The HELP loan limit will be indexed under Part 5-6 of HESA from 1 January 2021, as per current arrangements, according to the CPI, in order to keep pace with inflation.

Renewable HELP balance

Students in receipt of FEE-HELP, VET FEE-HELP or VET Student Loans have a FEE-HELP balance, which is essentially the current FEE-HELP limit, less the sum of all amounts of FEE-HELP, VET FEE-HELP or VET Student Loans they have been paid up until that time. A student with a FEE-HELP balance of zero is ineligible for further FEE-HELP, VET FEE-HELP or VET Student Loans.

Under the amendments to HESA contained in Schedule 3 to the Bill, from 1 January 2020, a student's FEE-HELP balance will become their HELP balance. In addition, students who access a HECS-HELP loan for a unit with a census date on or after 1 January 2020 will also have this loan count towards their HELP balance.

A student's HELP balance will be based on the HELP loan limit, less any amounts of FEE-HELP, VET FEE-HELP or VET Student Loans they have been paid, as well as any amounts of HECS-HELP they have been paid for units with census dates on or after 1 January 2020. A student with a HELP balance of zero is ineligible for further HECS-HELP, FEE-HELP or VET Student Loans (and technically VET FEE-HELP, although the VET FEE-HELP scheme ceased at the end of 2016).

However, a student will be able to increase their HELP balance by making repayments of their HELP debts. If a student makes a payment of their HELP debt (either voluntarily or through compulsory repayments) to the Australian Taxation Office (ATO) during a financial year, after the end of the financial year the ATO will inform the department of that repayment, and the department will credit the student's HELP balance with the amount of the repayment - thereby allowing the student to access further HECS-HELP, FEE-HELP or VET Student Loans by an equivalent amount.

Detailed explanation

Higher Education Support Act 2003

Items making consequential amendments to change references to FEE-HELP to HELP

The following items make consequential amendments to change references to FEE-HELP balance to HELP balance.

Items making consequential amendments to headings

Schedule 3 makes a number of consequential amendments to some headings in Part 3-3 of HESA and Subdivision 7-B of Schedule 1A to HESA. The changed headings are listed in the following table.

Item 1 - Subsection 36-21(2) (note)

Section 36-21 is in Division 36 of Part 2-2 of HESA, which sets out the conditions for a higher education provider to be eligible to receive a grant under the Commonwealth Grant Scheme. Section 36-20 requires a provider to repay amounts of student contribution amounts paid by a person for a unit of study, or to remit a person's HECS-HELP debt for a unit of study, if satisfied that special circumstances applied to the person. These special circumstances are specified in section 36-21.

This item makes a consequential amendment to the note at subsection 36-21(2) so that the note will read "Guidelines made for the purposes of this subsection also have effect for the purposes of subsections 97-30(2) and 104-30(2) (re-crediting a person's HELP balance)". Section 97-30 is inserted into HESA by item 6 of this Schedule.

Items 2 and 3 - Section 90

Section 90-1 lists a number of conditions governing a student's entitlement to HECS-HELP assistance.

Item 2 inserts an additional condition (as new paragraph 90-1(ba)) that the student's HELP balance must be greater than zero.

Item 3 adds a note to section 90-1 which explains that transitional provisions relating to new paragraph 90-1(ba) are set out in Part 2 of Schedule 3 to the Higher Education Support Legislation Amendment (Student Loan Sustainability) Act 2018.

Item 4 - At the end of section 93-1

Section 93-1 concerns the amount of HECS-HELP assistance for a unit of study. This item adds a note to section 93-1 to explain that a lesser amount may be payable because of section 93-20 (which is inserted by item 5 of this Schedule).

Item 5 - At the end of Division 93

Division 93 covers how amounts of HECS-HELP assistance are worked out.

This item inserts a new section 93-20 into Division 93 concerning how amounts of HECS-HELP assistance, FEE-HELP assistance and VET FEE-HELP assistance must not exceed the HELP balance.

New subsection 93-20(1) (Amount of HECS-HELP assistance for one unit) provides that the amount of HECS-HELP assistance to which a student is entitled for a unit of study is an amount equal to the student's HELP balance on the census date for the unit if the following apply:

•

there is no other unit of study with the same census date for which the student is entitled to HECS-HELP assistance (a note explains that transitional provisions relating to this requirement are set out in Part 2 of Schedule 3 to the Higher Education Support Legislation Amendment (Student Loan Sustainability) Act 2018)

•

there is no other unit of study with the same census date for which the student is entitled to FEE-HELP assistance

•

there is no other VET unit of study with the same census date for which the student is entitled to VET FEE-HELP assistance

•

the amount of HECS-HELP assistance to which the student would be entitled to under section 93-1 for the unit would exceed the HELP balance.

Note 1 to new subsection 93-20(1) explains that transitional provisions relating to subparagraph 93-20(2)(a)(i) are set out in Part 2 of Schedule 3 to the Higher Education Support Legislation Amendment (Student Loan Sustainability) Act 2018.

Note 2 to new subsection 93-20(1) explains that the amount of a VET Student Loan is limited by reference to a student's HELP balance as per sections 8 and 20 of the VET Student Loans Act. The note further explains that the student's HELP balance is reduced by the amount of any VET Student Loans previously payable to the student as per section 128-15 of HESA.

New subsection 93-20(2) (Amount of HECS-HELP assistance for more than one unit) provides that if: (1) the amount of HECS-HELP assistance to which a student is entitled for one unit of study under section 93-1; and (2) any other amounts of HECS-HELP assistance entitlement under section 93-1 for other units with the same census date; and (3) any amounts of FEE-HELP assistance entitlement under section 107-1 for other units with the same census date; and (4) any amounts of VET FEE-HELP assistance entitlement under clause 52 of Schedule 1A for other units with the same census date - exceed the person's HELP balance on the census date - then (despite subsection 93-20(1)) the total amount of assistance (for all these HELP categories) is limited to an amount that is equal to the HELP balance.

An example illustrates this limitation. Under the example, Kate has a HELP balance of $2,000 and is enrolled in four units that all have the same census date, with there being a student contribution amount of $600 payable for each of the units (with no up-front payments). Even though the total amount of the student contributions for the four units is $2,400, Kate is only entitled to a total of $2,000 HECS-HELP assistance.

Note 1 to new subsection 93-20(2) explains that transitional provisions relating to subparagraph 93-20(2)(b)(i) are set out in Part 2 of Schedule 3 to the Higher Education Support Legislation Amendment (Student Loan Sustainability) Act 2018.

Note 2 to new subsection 93-20(2) explains that the amount of a VET Student Loan is limited by reference to a student's HELP balance as per sections 8 and 20 of the VET Student Loans Act. The note further explains that the student's HELP balance is reduced by the amount of any VET Student Loans previously payable to the student as per section 128-15 of HESA.

New subsection 93-20(3) concerns the situation where a student (as referred to in subsection 93-20(2)) has enrolled in units with more than one higher education provider or VET provider. In such cases, the student must notify each provider of the amount of HECS-HELP assistance, FEE-HELP assistance or VET FEE-HELP assistance that is payable in relation to the units in which the student has enrolled with that provider.

Item 6 - At the end of Part 3-2

This item inserts a new Division 97 into HESA (re-crediting of HELP balances in relation to HECS-HELP assistance) consisting of the following new sections:

•

97-23 - purpose

•

97-25 - main case of re-crediting a person's HELP balance in relation to HECS-HELP assistance

•

97-27 - re-crediting a person's HELP balance in relation to HECS-HELP assistance - no tax file number

•

97-30 - special circumstances

•

97-35 - application period

•

97-40 - dealing with applications

•

97-42 - re-crediting a person's HELP balance in relation to HECS-HELP assistance - provider ceases to provide course of which unit forms part.

Section 97-23

This section provides that the purpose of Division 97 is to set out the circumstances when a person's HELP balance is to be re-credited with an amount equal to the amounts of HECS-HELP assistance he or she received for a unit of study. A note explains that transitional provisions relating to Division 97 are set out in Part 2 of Schedule 3 to the Higher Education Support Legislation Amendment (Student Loan Sustainability) Act 2018.

Section 97-25

This section concerns the main case for re-crediting a person's HELP balance in relation to HECS-HELP assistance.

Subsection 97-25(1) provides that section 97-25 does not apply in circumstances where section 97-42 applies to re-credit a person's HELP balance with an amount equal to the amounts of HECS-HELP assistance the person received for units of study.

Subsection 97-25(2) requires a higher education provider (on behalf of the Secretary) to re-credit a person's HELP balance with an amount equal to the amounts of HECS-HELP assistance the person received for a unit of study where each of the following apply:

•

the person was enrolled in the unit with the provider

•

the person did not complete the unit's requirements during the time the person undertook, or was to have undertaken, the unit

•

the provider is satisfied special circumstances (within the meaning of section 97-30) apply to the person

•

the person applies in writing to the provider for re-crediting

•

the application is made within the time period specified in section 97-35, or the provider has waived that time period on the ground that it would not be, or was not, possible for the application to be made within that time period.

Subsection 97-25(3) provides that if a provider is unable to act for one or more of the purposes in subsection 97-25(2), or sections 97-30, 97-35 or 97-40 - then the Secretary may act as if the references in those provisions to the provider were a reference to the Secretary instead.

Section 97-27

This section concerns re-crediting a person's HELP balance in relation to HECS-HELP assistance where there is no tax file number.

Subsection 97-27(1) requires a higher education provider (on behalf of the Secretary) to re-credit a person's HELP balance with an amount equal to the amounts of HECS-HELP assistance the person received for a unit of study where both of the following apply:

•

the person was enrolled in the unit with the provider

•

subsection 193-5(1) applies to the person in relation to the unit.

Subsection 193-5(1) requires a higher education provider to cancel a person's enrolment in a unit of study if they do not have, or no longer have, a tax file number.

Subsection 97-27(2) provides that if the higher education provider is unable to re-credit a person's HELP balance under subsection 97-27(1), then the Secretary may re-credit the HELP balance.

Section 97-30

Subsection 97-25(1) sets out a number of criteria relating to when a higher education provider must, on the Secretary's behalf, re-credit a person's HELP balance in relation to the HECS-HELP assistance they have received. One of these criteria is that the provider is satisfied special circumstances within the meaning of section 97-30 apply to the person (paragraph 97-25(2)(c)).

Subsection 97-30(1) provides that these special circumstances criteria are that the provider must be satisfied the person's circumstances:

•

are beyond the person's control (paragraph 97-30(1)(a))

•

do not make their full impact on the person until on or after the census date for the relevant unit of study (paragraph 97-30(1)(b))

•

make it impracticable for the person to complete the requirements for the unit during the period the person undertook the unit, or was to have undertaken the unit (paragraph 97-30(1)(c)).

Subsection 97-30(2) provides that a higher education provider's decision on special circumstances must be in accordance with any criteria that may be specified in the Administration Guidelines (see section 238-10) with respect to matters referred to in paragraphs 36-21(1)(a), (b), or (c). A note to subsection 97-30(2) explains that the matters in paragraphs 36-21(1)(a), (b), or (c) are identical to those in paragraphs 97-30(1)(a), (b) and (c).

Section 97-35

Section 97-35 sets out rules governing the application period for the purpose of applications made under paragraph 97-25(2)(d) for the re-crediting of HELP balances.

Subsection 97-35(1) provides that as long as a person applying to a higher education provider under paragraph 97-25(1)(d) for the re-crediting of their HELP balance in relation to a unit of study has withdrawn his or her enrolment in the unit and the provider has given the person notice the withdrawal has taken effect - then the period in which the person must make their application is within 12 months after the day specified in the notice as the day the withdrawal took effect.

Subsection 97-35(2) provides that in circumstances where subsection 97-35(1) does not apply, the application period is within 12 months after the period when the person undertook, or was to have undertaken, the unit.

Section 97-40

Section 97-40 concerns how higher education providers must deal with applications for re-crediting HELP balances.

Subsection 97-40(1) provides that where a higher education provider has received an application within the 12-month timeframe stipulated in paragraph 97-25(1)(d), or the provider has waived the requirement the application be made within that timeframe on the ground that it would not be possible, or was not possible, for the application to have been made within the timeframe - then the provider must consider and make a decision on the application and notify the applicant as soon as practicable.

Under subsection 97-40(2) the notices under subsection 97-40(1) must include a statement of reasons for the decision.

A note to subsection 97-40(2) explains that refusals of applications are reviewable under Part 5-7 of HESA.

Section 97-42

This section concerns re-crediting a person's HELP balance in relation to HECS-HELP assistance where the person's provider ceases to provide a course (that a unit forms part of).

Subsection 97-42(1) provides that a higher education provider must, on the Secretary's behalf, re-credit a person's HELP balance with an amount equal to the amount of HECS-HELP assistance a person received for a unit of study where the following all apply:

•

the person was enrolled in the unit with the provider

•

the person failed to complete the unit requirements (during the time they undertook, or were to have undertaken the unit) because the provider ceased to provide the course that the unit formed part of

•

the tuition assurance requirements (see section 16-30) applied to the provider at the time the provider ceased to provide the course

•

the person chose the tuition assurance requirement option of student contribution / tuition fee repayment for the unit.

A note to subsection 97-42(1) explains that a HECS-HELP debt for a unit of study will be remitted if the HELP balance for the unit is re-credited (as per subsection 137-5(5)).

Subsection 97-42(1) provides that the Secretary may act to re-credit a person's HELP balance under subsection 97-42(1) if the provider is unable to do so.

Item 9 - Sections 104-15 and 104-20

Item 9 repeals sections 104-15 (a person's FEE-HELP balance) and 104-20 (the FEE-HELP limit). These sections are no longer required due to other amendments made by this Schedule (especially those made by item 54 which adds a new Part 3-6 titled 'HELP balances', consisting of new sections 128-7, 128-15 and 128-20).

Items 16 and 17 - Section 104-25

Section 104-25 concerns the main case for re-crediting a person's HELP balance.

Item 17 adds a new subsection 104-25 which provides that if Open Universities Australia is unable to act for one of the purposes in subsection 104-25(2), or sections 104-30, 104-35 or 104-40 - then the Secretary may act as if the references in those provisions to Open Universities Australia were a reference to the Secretary.

Item 16 makes a minor consequential amendment to subsection 104-25(3) to remove reference to 'or (2)'.

Items 37, 39, 40, 45 and 46 - Section 107-10

Currently, under section 107-10 amounts of FEE-HELP assistance and VET FEE-HELP assistance must not exceed the FEE-HELP balance.

Item 37 amends subsection 107-10(1) to insert a new subparagraph 107-10(1)(a)(ia) referring to HECS-HELP assistance. As a result of this, subsection 107-10(1) provides that the amount of FEE-HELP assistance to which a student is entitled for a unit of study is an amount equal to the student's HELP balance on the census date if:

•

there is no other unit of study, with the same census date, for which the student is entitled to FEE-HELP assistance (subparagraph 107-10(1)(a)(i))

•

there is no other unit of study, with the same census date, for which the student is entitled to HECS-HELP assistance (subparagraph 107-10(1)(a)(ia))

•

there is no other VET unit of study, with the same census date, for which the student is entitled to VET FEE-HELP assistance (subparagraph 107-10(1)(a)(ii))

•

the amount of FEE-HELP assistance the student would be entitled to under section 107-1 for the unit would exceed that HELP balance (paragraph 107-10(1)(b)).

Item 39 inserts new notes at subsection 107-10(1).

Note 1 explains that transitional provisions relating to subparagraph 107-10(1)(a)(ia) are contained in Part 2 of Schedule 3 to the Higher Education Support Legislation Amendment (Student Loan Sustainability) Act 2018.

Note 2 explains that the amount of a VET Student Loan is limited by reference to a student's HELP balance as per sections 8 (amount of loan) and 20 (when the Secretary is not required to pay loan amount) of the VET Student Loans Act. Note 2 further explains that the student's HELP balance is reduced by the amount of any VET Students Loans that have previously been payable to student - as per section 128-15 of HESA (as inserted by item 54 of this Schedule).

Item 40 amends subsection 107-10(2) to insert a new subparagraph 107-10(2)(b)(ia) referring to HECS-HELP assistance. As a result of this, subsection 107-10(2) provides that if the amount of FEE-HELP assistance to which a student would be entitled under section 107-1 for a unit of study and any other amounts of:

•

FEE-HELP assistance to which the student would be entitled under section 107-1 for other units that have the same census date as that unit

•

HECS-HELP assistance to which the student would be entitled under section 93-1 for other units that have the same census date as that unit

•

VET FEE-HELP to which the student would be entitled under clause 52 of Schedule 1A for other units that have the same census date as that unit

would exceed the student's HELP balance on the census date for the unit then, despite subsection 107-10(1), the amount of FEE-HELP assistance, HECS-HELP assistance [note that the reference to HECS-HELP assistance is added by item 40 of this Schedule] and VET FEE-HELP assistance to which the student is entitled for all those units is an amount equal to the HELP balance.

Item 45 inserts new notes at subsection 107-10(2).

Note 1 explains that transitional provisions relating to subparagraph 107-10(2)(b)(ia) are contained in Part 2 of Schedule 3 to the Higher Education Support Legislation Amendment (Student Loan Sustainability) Act 2018.

Note 2 explains that the amount of a VET Student Loan is limited by reference to a student's HELP balance as per sections 8 (amount of loan) and 20 (when the Secretary is not required to pay loan amount) of the VET Student Loans Act. Note 2 further explains that the student's HELP balance is reduced by the amount of any VET Students Loans that have previously been payable to student - as per section 128-15 of HESA (as inserted by item 54 of this Schedule).

Item 46 inserts reference to 'HECS-HELP assistance' into subsection 107-10(3). As a result, subsection 107-10(3) provides that if a student has enrolled in units with more than one higher education provider or VET provider, and access to none of these units is through Open Universities Australia - the student must notify each provider of the proportion of the total amount of FEE-HELP assistance, HECS-HELP assistance or VET FEE-HELP assistance that is to be payable in relation to those units in which the student has enrolled with the provider concerned.

Item 54 - At the end of Chapter 3

Item 54 amends HESA to add a new Part 3-6 titled 'HELP balances', consisting of new sections 128-7, 128-15,128-20 and 128-25.

Section 128-7

New section 128-7 gives a brief explanation of Part 3-6. It explains that a person's HELP balance at a particular time is worked out by reference to the following:

•

the HELP loan limit in relation to the person at the time

•

the amounts of HECS-HELP assistance, FEE-HELP assistance, VET FEE-HELP assistance and VET Student Loans that have previously been payable to the person

•

amounts previously re-credited to the person's HELP balance (including repayment of HELP debts).

Section 128-15

Subsection 128-15(1) provides that a person's HELP balance at any particular time is as follows:

•

if the person's HELP loan limit at the time exceeds the sum of the following previously payable to the person:

o

HECS-HELP assistance

o

FEE-HELP assistance

o

VET FEE-HELP assistance

o

VET Student Loans

as reduced by any of the following amounts re-credited to the person's HELP balance under:

•

Division 97 of HESA (see item 6 of this Schedule)

•

Subdivision 104-B of HESA

•

section 128-25 of HESA

•

Subdivision 7-B of Schedule 1A to HESA

•

Part 6 of the VET Student Loans Act

then the HELP balance is that excess

•

otherwise the HELP balance is zero.

Note 1 to section 128-15 explains that:

•

if an amount is to be re-credited to a HELP balance, the balance of that amount to be re-credited is worked out immediately before the re-crediting

•

the balance is worked out after the re-crediting, taking into account the amount re-credited

•

if a person's HELP loan limit has been reduced, the balance may not increase, or may not increase by the same amount as the amount re-credited.

Note 2 to section 128-15 explains that transitional provisions relating to section 128-15 are set out in Part 2 of Schedule 3 to the Higher Education Support Legislation Amendment (Student Loan Sustainability) Act 2018. It goes on to explain that the effect of those provisions is that subparagraph 128-15(1)(a)(i) does not apply to a unit of study if its census date is before 1 January 2020. That is, amounts of HECS-HELP borrowed for units with census dates before 1 January 2020 are not counted when calculating a person's HELP balance.

Subsection 128-15(2) provides that, for the purposes of subparagraphs 128-15(1)(a)(i) to (iv), it does not matter whether any amounts of HECS-HELP assistance, FEE-HELP assistance, VET FEE-HELP assistance and VET student loans have been repaid by the person (other than by way of repayments of HELP debts, which are dealt with in section 128-25). Thus, for example, if a person had been paid an amount of FEE-HELP assistance in error, and had repaid that FEE-HELP (the incorrect amount of FEE-HELP never becoming part of the person's HELP debt), that amount of FEE-HELP assistance is not taken into account in working out the person's HELP balance.

Subsection 128-15(3) provides that subsection 128-15(2) is included for the avoidance of doubt.

Section 128-20

Section 128-20 provides that the HELP loan limit (on 1 January 2020) is the amount that the FEE-HELP limit would have been, had section 104-20 of HESA (which provides for the FEE-HELP limit) not been repealed, and the FEE-HELP limit was indexed in the normal way under Part 5-6 on 1 January 2020. (The FEE-HELP limits in 2019 are $104,440, or $150,000 for persons enrolled in courses of study in medicine, dentistry, or veterinary science; this means that the HELP loan limit in 2020 will be those amounts indexed by CPI for one year in accordance with the method set out in Part 5-6 of HESA).

A note explains that the HELP loan limit is indexed under Part 5-6 of HESA.

Section 128-25

Section 128-25 provides for the re-crediting of a person's HELP balance by the Secretary, by an amount equal to the amount of repayments the person has made on their HELP debt in the preceding financial year.

If a person makes a repayment in discharge of a debt under Chapter 4 of HESA during a financial year - including a voluntary payment in accordance with Division 151 of HESA, or where the ATO applies an amount of a payment compulsorily made to the ATO, such as amount withheld under PAYG arrangements, to the debt - the ATO must inform the Secretary of that repayment, as soon as practicable after the end of the financial year.

As a consequence of being informed of the repayment, the Secretary must then re-credit the person's HELP balance with an amount equivalent to the amount of the repayment.

Note that only HELP debt repayments made from 1 July 2019 (i.e. the start of the 2019-20 financial year) will be re-credited to a person's HELP balance. HELP debt repayments made prior to that time will not affect a person's HELP balance.

Item 55 - At the end of section 137-5

Section 137-5 concerns HECS-HELP debts. Item 55 adds a new subsection 137-5(5) which provides that a person's HECS-HELP debt for a unit of study is taken to be remitted if the person's HELP balance is re-credited under sections 97-25, 97-27, or 97-42 in relation to the unit. A note to new subsection 137-5 explains that the person's debt is taken to be remitted even if their HELP balance is not increased by an amount equal to the amount re-credited.

Items 62 and 63 - Subsection 193-5(1)

Section 193-5 concerns there being no HECS-HELP assistance for students without tax file numbers and subsection 193-5(1) sets out a number of criteria that govern when a provider must cancel a person's enrolment in a unit of study.

There is currently one note to subsection 193-5(1). These items add an additional note (as note 2) and number the existing note as note 1. New note 2 explains that a person's HELP balance in relation to the unit of study in question is re-credited and draws reference to subsection 97-27(1) (see item 6 which inserts new section 97-27).

Item 66 - Subsection 198-5(1) (table item 4)

Subsection 198-5(1) contains a table with various items that list the amounts referred to in those provisions of HESA that are to be indexed. This item repeals and substitutes table item 4 so that instead of the FEE-HELP limit under section 104-20 being indexed, the HELP loan limit under section 128-20 is to be indexed (see item 54 which inserts new section 128-20).

Items 67 and 70 - Section 206-1

Section 206-1 contains a table setting out those decisions under HESA that are reviewable decisions.

Item 67 adds a new item 1B to the table so that decisions, made under subsection 97-25(2), to refuse to re-credit a person's HELP balance, where the decision maker is the higher education provider with whom the student is enrolled, or the Secretary if the Secretary made the decision - are also reviewable decisions.

Item 70 makes a consequential amendment to note 1 to section 206-1 to insert reference to table item 1B.

Items 74 and 76 - Clause 46 of Schedule 1A

Clause 46 of Schedule 1A concerns the main case for re-crediting a person's HELP balance.

Item 74 changes the heading to clause 46 from 'Main case of re-crediting a person's FEE-HELP balance' to 'Main case of re-crediting a person's HELP balance in relation to VET FEE-HELP assistance'.

Item 76 repeals and substitutes the note to subclause 46(1) so that it reads 'For HELP balance, see section 128-15, and for HELP loan limit see section 128-20.'

Items 97 to 109 - Clause 54 of Schedule 1A

Currently, under clause 54 of Schedule 1A amounts of VET FEE-HELP assistance and FEE-HELP assistance must not exceed the FEE-HELP balance.

Item 97 repeals and substitutes the heading to clause 54 so that it reads 'Amounts of VET FEE HELP assistance, HECS HELP assistance and FEE HELP assistance must not exceed the HELP balance'.

Item 99 amends subclause 54(1) to insert a new subparagraph 54(1)(a)(ia) referring to HECS-HELP assistance. As a result of this, subclause 54(1) provides that the amount of VET FEE-HELP assistance to which a student is entitled for a VET unit of study is an amount equal to the student's HELP balance on the census date if:

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there is no other VET unit of study, with the same census date, for which the student is entitled to VET FEE-HELP assistance (subparagraph 54(1)(a)(i))

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there is no other unit of study, with the same census date, for which the student is entitled to HECS-HELP assistance (subparagraph 54(1)(a)(ia))

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there is no other unit of study, with the same census date, for which the student is entitled to FEE-HELP assistance (subparagraph 52(1)(a)(ii))

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the amount of VET FEE-HELP assistance the student would be entitled to under clause 25 for the unit would exceed that HELP balance (paragraph 54(1)(b)).

Note that:

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item 98 of this Schedule makes a consequential change to subclause 54(1) so that the reference to 'the student's FEE-HELP balance' refers instead to 'the student's HELP balance'

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item 100 of this Schedule makes a further consequential amendment to paragraph 54(1)(b) so that the reference to 'FEE-HELP balance' reads 'HELP balance'.

Item 101 inserts new notes at subclause 54(1) of Schedule 1.

Note 1 explains that transitional provisions relating to subparagraph 54(1)(a)(ia) are contained in Part 2 of Schedule 3 to the Higher Education Support Legislation Amendment (Student Loan Sustainability) Act 2018.

Note 2 explains that the amount of a VET Student Loan is limited by reference to a student's HELP balance as per sections 8 (amount of loan) and 20 (when the Secretary is not required to pay loan amount) of the VET Student Loans Act. Note 2 further explains that the student's HELP balance is reduced by the amount of any VET Students Loans that have previously been payable to student - as per section 128-15 of HESA (as inserted by item 54 of this Schedule).

Item 102 amends paragraph 54(2)(b) to insert a new subparagraph 54(2)(b)(ia) referring to HECS-HELP assistance. As a result of this, subclause 54(2) provides that if the amount of VET FEE-HELP assistance to which a student would be entitled under clause 52 for a VET unit of study and any other amounts of:

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VET FEE-HELP assistance to which the student would be entitled under clause 52 for other units that have the same census date as that unit

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HECS-HELP assistance to which the student would be entitled under section 93-1 for other units that have the same census date as that unit

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FEE-HELP to which the student would be entitled under section 107-1 [note that item 103 of this Schedule changes the reference to 'clause 52' in subparagraph 54-2(b)(ii) to 'section 107-1' - this corrects a pre-existing drafting error] for other units that have the same census date as that unit

would exceed the student's HELP balance on the census date for the unit then, despite subclause 54(1), the amount of VET FEE-HELP assistance, HECS-HELP assistance [note that the reference to HECS-HELP assistance is added by item 105 of this Schedule] and FEE-HELP assistance to which the student is entitled for all those units is an amount equal to the HELP balance.

Note that items 104, 106 and 107 of this Schedule make consequential changes to subclause 54(2) and its example so that references to 'FEE-HELP balance' refer instead to 'HELP balance'.

Item 108 inserts new notes at subclause 54(2).

Note 1 explains that transitional provisions relating to subparagraph 54(2)(b)(ia) are contained in Part 2 of Schedule 3 to the Higher Education Support Legislation Amendment (Student Loan Sustainability) Act 2018.

Note 2 explains that the amount of a VET Student Loan is limited by reference to a student's HELP balance as per sections 8 (amount of loan) and 20 (when the Secretary is not required to pay loan amount) of the VET Student Loans Act. Note 2 further explains that the student's HELP balance is reduced by the amount of any VET Students Loans that have previously been payable to student - as per section 128-15 of HESA (as inserted by item 54 of this Schedule).

Item 109 inserts reference to 'HECS-HELP' assistance into subclause 54(3). As a result, subclause 54(3) provides that if a student has enrolled in units with more than one VET provider or higher education provider, the student must notify each provider of the proportion of the total amount of VET FEE-HELP assistance, HECS-HELP assistance or FEE-HELP assistance that is to be payable in relation to those units in which the student has enrolled with the provider concerned.

Items 120 and 121 - Dictionary at Schedule 1

These items amend the Dictionary at Schedule 1 of HESA to:

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repeal the definition of FEE-HELP balance, which is no longer required

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repeal the definition of FEE-HELP limit, which is no longer required

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insert the definition of HELP balance - which carries the meaning given by section 128-15

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insert the definition of HELP loan limit - which carries the meaning given by section 128-20.

VET Student Loans Act 2016

The following items make consequential amendments to change references in the VET Student Loans Act to FEE-HELP balance (or FEE-HELP balances) to HELP-balance (or HELP balances):

Item 123 - Section 6 (definition of FEE-HELP balance)

This item repeals the definition of FEE-HELP balance in section 6 as the concept is no longer relevant.

Item 124 - Section 6

This item inserts a definition of HELP balance in section 6 (in place of the repealed definition of FEE-HELP balance). HELP balance carries the same meaning as in HESA.

Part 2 - Application and transitional provisions

Item 144 - Application - HELP balance provisions

Subitem 144(1), for the purpose of this item, defines HELP balance provisions as the following provisions of HESA as amended by Schedule 3 to this Bill:

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paragraph 90-1(ba)

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section 93-20 so far as that section relates to an amount of HECS-HELP assistance to which a student is or would be entitled for a unit of study

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subparagraph 128-15(1)(a)(i)

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Division 97

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subparagraph 107-10(1)(a)(ia)

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subparagraph 107-10(2)(b)(ia)

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subparagraph 54(1)(a)(ia) of Schedule 1A

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subparagraph 54(2)(b)(ia) of Schedule 1A.

Subitem 144(2) provides that the HELP balance provisions apply to those units of study in a course of study that a student was or is enrolled in with a higher education provider where the census date for the unit is on or after 1 January 2020.

Item 145 - Transitional - re-credited amounts

This item concerns an amount re-credited to a person's FEE-HELP balance before 1 January 2020 under any of the following:

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Subdivision 104-B of HESA

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Subdivision 7-B of Schedule 1A to HESA

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Part 6 of the VET Student Loans Act.

In respect of such a re-credited amount, this item provides that section 128-15 of HESA (concerning HELP balances as inserted into HESA by item 54 of this Schedule) has effect as if the amount had been re-credited to the person's HELP balance immediately after the start of 1 January 2020.

Item 146 - Transitional - pending decisions about re-credited amounts

This item concerns an application made (under section 104-25 of HESA, or clause 46 of Schedule 1A to HESA, or section 72 of the VET Student Loans Act) before 1 January 2020 for re-crediting of an amount to a person's FEE-HELP balance and where no decision has been made on the application before this item commences (i.e. no decision has been made before 1 January 2020).

In such circumstances, the application is taken to have effect, after the start of 1 January 2020, as if it were an application for re-crediting of an amount to the person's HELP balance.

Item 147 - Transitional - indexation

Section 198-5 of HESA sets out those amounts under HESA that are to be indexed. Subsection 198-10(1) of HESA provides that an amount (to be indexed) is indexed on 1 January 2012, and on each subsequent 1 January, by multiplying it by the indexation factor for the relevant year.

This item provides that subsection 198-10(1) does not operate to index the HELP loan limits on 1 January 2020. The HELP loan limits that come into effect on 1 January 2020 under new section 128-20 are the amounts set out in that section, not those amounts as indexed (since the amount under new section 128-20 are already the amounts as if they had been indexed on 1 January 2020, applying indexation again on 1 January 2020 would double the annual indexation of those amounts).