House of Representatives

Explanatory Memorandum

Circulated By Authority of the Minister for Tertiary Education, Skills, Jobs and Workplace Relations

Schedule 2 - Up-front payments

Summary

Schedule 2 would amend sections 36-50, 90-1, 93-15, 96-5, 96-10, 193-1 and 193-5 of HESA to reduce the HECS-HELP up-front discount from 20 per cent to 10 per cent.

Background

The Government announced in the 2011-12 Budget that it would reduce the

HECS-HELP discount, given to eligible higher education students who pay $500 or more of their student contribution amount up-front, from 20 per cent to 10 per cent from 1 January 2012.

Currently students enrolled in a Commonwealth supported place can make a full up-front payment by paying 80 per cent of the student contribution amount for all of their units in a course of study with the same census date. The Commonwealth pays the remaining 20 per cent of the student contribution amount if this occurs. Students can also pay part of their student contribution up-front and receive a 20 per cent discount for any payments totalling $500 or more for units in a course of study with the same census date. The amount of the discount is paid by the Commonwealth to the student's higher education provider.

Detailed explanation

Higher Education Support Act 2003

Item 1 - Section 36-50 (heading)

Item 1 is a consequential amendment to Item 2 and amends the heading to section 36-50 of HESA to replace the reference to 80% with 90%. The amended heading would read "Provider must not accept up-front payments of more than 90% of student contribution amounts".

Item 2 - Section 36-50

Section 36-50 of HESA currently restricts a higher education provider from accepting from students enrolled in units of study and who are entitled to HECS-HELP assistance, up-front payments of more than 80 per cent of their student contribution for the unit. In other words, this limits the student contribution to 80 per cent in the event of up-front payments being made.

Item 2 would amend section 36-50 by replacing references to 80 per cent with references to 90 per cent. The effect of this would be to reduce the HECS-HELP

up-front discount from 20 per cent to 10 per cent.

Item 3 - Subparagraph 90-1(f)(ii)

Section 90-1 of HESA provides for students' entitlement to HECS-HELP assistance. Among other things, a student is entitled to HECS-HELP assistance for a unit if they have either met the tax file number requirements, or they have paid 80 per cent of their student contribution amount for the unit up-front (paragraph 90(1)(f)).

Item 3 would amend subparagraph 90(1)(f)(ii) by replacing the reference to 80 per cent with a reference to 90 per cent of the student contribution amount.

Item 4 - Subsection 93-15(3)

Section 93-15 deals with up-front payments of HECS-HELP assistance and subsection 93-15(3) provides that a payment made in respect of a person is not to be treated as an up-front payment if that payment, in conjunction with other payments made by the person (or on their behalf), exceeds 80 per cent of the student contribution amount for a unit.

Item 4 would replace the reference to 80 per cent with a reference to 90 per cent.

Items 5 and 6 - Section 93-15 (notes 1 and 2)

Consequent upon the reduction of the HECS-HELP up-front discount to 10 per cent, Item 5 would repeal and substitute note 1 to section 93-15. The new note would replace the reference to the Commonwealth paying one quarter with a reference to one ninth and would replace the reference to 80 per cent with a reference to 90 per cent. Item 6 would similarly replace the reference to 80 per cent in note 2 with a reference to 90 per cent.

Items 7 and 8 - Paragraph 96-5(1)(c) and subsection 96-5(4)

Section 96-5 of HESA deals with the partial up-front payment of the student contribution amount.

Consequent upon the reduction of the HECS-HELP up-front discount from 20 per cent to 10 per cent:

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Item 7 would replace the reference to 80 per cent in paragraph 96-5(1)(c) with reference to 90 per cent; and

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Item 8 would repeal and substitute subsection 96-5(4), including a new example which explains the effect of a student making a partial up-front payment.

Items 9 and 10 - Paragraph 96-10(c) and Section 96-10 (note)

Section 96-10 provides for payments by the Commonwealth to a higher education provider where a student has made one or more up-front payments of their student contribution amount for a unit of study. Items 9 and 10 would replace the reference to 80 per cent with a reference to 90 per cent in paragraph 96-10(c) and in the note to section 96-10.

Item 11 - Paragraph 193-1(5)(b)

Section 193-1 of HESA deals with the requirement for a higher education provider to notify its students about meeting the tax file number requirements (see section

187-1). Paragraph 193-1(5)(b) provides that this does not apply where the student has requested HECS-HELP assistance for a unit, but has made one or more up-front payments totalling 80 per cent of the student's contribution amount. Item 11 would replace the reference to 80 per cent with a reference to 90 per cent.

Item 12 - Paragraph 193-5(1)(d)

Under section 193-5 of HESA, if the Commissioner of Taxation notifies a provider that a student does not have, or no longer has, a tax file number, the provider must cancel the student's enrolment as a Commonwealth supported student in the unit of study for which the student was seeking HECS-HELP assistance if, at the end of 28 days after receipt of the notice from the Commissioner, the provider has not been notified of a number that the provider is satisfied is a valid tax file number.

This does not apply where the student has made one or more up-front payments totalling 80 per cent of the student's contribution amount (paragraph 193-5(1)(d)) - ie there would be no need for a tax file number for the unit as the student would not incur a HECS-HELP debt for the unit. Item 12 would replace the reference to 80 per cent in paragraph 193-5(1)(d) with a reference to 90 per cent.

Item 13 - Application provision

Item 13 provides that the amendments to be made by Schedule 2 will only apply to units that have census dates that fall on or after Schedule 2 commences. Clause 2 provides that Schedule 2 will commence on the later of 1 January 2012 and the day on which this Bill (if passed by Parliament) receives Royal Assent. In other words, the reduction in the up-front discount from 20 per cent to 10 per cent will only apply from this commencement date.