Mr CLARE (Parliamentary Secretary for Employment) (10:05 AM) —I move:

The Higher Education Support Amendment (FEE-HELP Loan Fee) Bill 2010 amends the Higher Education Support Act 2003 to implement the government’s decision to increase the loan fee from 20 per cent to 25 per cent for undergraduate courses.

The amendment will implement the recommendation of the Review of Australian Higher Education to increase the loan fee for FEE-HELP for fee-paying undergraduate students to 25 per cent.

The Bradley review of Australian higher education’s final report noted that the implied subsidy offered through a FEE-HELP loan increases significantly with the level of debt. This means the government subsidy varies considerably by course.

Tuition fees for undergraduate fee-paying courses can be substantially higher than Commonwealth supported places. When the level of FEE-HELP debt rises significantly, the taxpayer funded subsidies for the loans also substantially increase.

An increase in the loan fee will enable the government to recover more of the taxpayer subsidised cost of providing FEE-HELP loans.

Even with a five per cent increase in the loan fee the conditions of the government’s FEE-HELP scheme continue to provide an extremely favourable income contingent loan for students. If students do not repay their loan, the government meets the cost.

The FEE-HELP loan fee applies only to fee-paying domestic students enrolled in an undergraduate course.

Students do not have to start repaying their HELP loan until their income reaches the minimum repayment threshold of $43,152.

The increase in the FEE-HELP loan fee will apply to FEE-HELP debts incurred on or after 1 July 2010 in relation to units of study whose census dates are on or after 1 July 2010.

I commend the bill to the House.

Debate (on motion by Mr Billson) adjourned.