The Australian government is still pursuing more than 140,000 former low-income students who traded away their right to welfare benefits under a loan program more than 20 years ago for $2 billion in debt.
In order to qualify for the student financial supplement program, which ran for ten years starting in 1993, tertiary students had to forgo benefits like the youth allowance, Austudy, or the pensioner education supplement.
Legacy of High Debt and Administrative Struggles
A student may receive $2 in an SFSS loan for every dollar of welfare they forwent, which they could utilize to help pay for educational costs. Moreover, loans might be obtained by minors.
Towards the end of 2003, the Coalition abandoned the program after admitting that it had high debt loads for students, was administratively onerous and poorly targeted, and had actually affected people with hidden interest rate expenses through forgone benefits.
It also acknowledged that many students would find it difficult to repay the loans.
The government actuary predicted that around 50% of the loans would be recovered when the plan was abandoned.
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150,000 Australians Still Struggling to Repay $2.1bn
14 years after it was thrown out, in 2017 that more than 150,000 people still owed roughly $2.1 billion in debt.
As of March, 143,487 people were still making payments on $2 billion in debt. $128,768 was the highest single balance.
According to a representative of the Australian Taxation Office, SFSS was being collected as part of the general system for other student loans.
Debt currently prevents 140,000 people from being able to purchase a home. They were defrauded of the welfare benefits to which they were legitimately entitled.
In a Senate committee-rejected Greens bill, calls were made to erase SFSS debt and boost the minimum repayment level to the median earnings, or around $60,000. O’Connell reiterated such calls.
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