The current tax on learning, charged in addition to a loan some students take out from the Australian Government when they study with an independent tertiary education provider, should be one of the first things to be removed in next week’s Federal Budget. That’s the call from the Independent Tertiary Education Council Australia (ITECA), the peak body representing independent providers in the skills training, higher education and international education providers.
The current student loan tax is grossly inequitable and discriminates against students based on their study and career choices. Students studying with an independent higher education provider* and who access a FEE-HELP loan for undergraduate study pay an additional 20% student loan tax on their borrowing. Thus, a student’s $40,000 debt to the Australian Government becomes $48,000.
“It’s discriminatory and wrong that students who study with an independent higher education provider have to pay this loan tax over and above their student debt. The travesty is that these students are treated differently from those studying at public universities who not only access significantly subsidised places but also don’t incur the additional liability that comes with the student loan tax,” said Troy Williams, ITECA Chief Executive.
Similarly, in the skills training sector, the VET Student Loans program charges students a 20% tax for taking out a loan when borrowing from the Australian Government to undertake a Diploma or higher qualification. Thus, a student’s $18,000 debt to the Australian Government becomes $21,600.
“In the middle of a skills crisis, we want students to invest in study to get the skills to prepare them for a productive role in the workforce. Instead, the Australian Government is sending the direct signal to penalise those students by whacking them with a 20% additional tax,” Mr Williams said.
The Australian Government has stated that the student loan tax is required to recognise the cost of loans unlikely to be repaid, but both loan programs are repaid through the tax system when a student enters the workforce and earns above the prescribed threshold. This inequitable tax only applies to some students: only higher education students at independent providers and VET students who are not lucky enough to be in a subsidised place (the vast majority of whom are at independent providers).
“By adding a loan tax, the Government is making it 20% harder for students at independent tertiary education providers to pay back that loan, contribute to their communities, the economy and get ahead in life,” Mr Williams said.
In the lead-up to the federal budget, ITECA has advised the Australian Government that the loan tax should be waived.
“Employers face skills shortages and the Australian Government has sent several strong signals that it is willing to put in place the reforms to address these shortages. Removing this most egregious tax on students wanting to skill or upskill themselves would be a positive move,” Mr Williams concluded.
Independent tertiary education providers support more than 87% of the 4.3 million students in a skills training program and 10% of the 1.6 million students in a higher education awards program.
Ends. * Except Bond University, the University of Notre Dame Australia, the University of Divinity, and Torrens University Australia
Key Facts:
Many students accessing an Australian Government loan to undertake higher education or skills trainnig courses with independent providers pay a 20% loan fee which is addedd to their student debt.
About us:
ITECA Introduction: The Independent Tertiary Education Council Australia (ITECA) is the peak body representing independent tertiary education providers support more than 87% of the 4.3 million students in a skills training program and 10% of the 1.6 million students in a higher education awards program.
