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Changes to Youth Allowance to assist gap year students.

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The Hon Julia Gillard MP 

Minister for Education. Minister for Employment and Workplace Relations 

Minister for Social Inclusion 

Deputy Prime Minister 

26 August, 2009  

Media release 

Changes to Youth Allowance to assist gap year students 

The Minister for Education, Julia Gillard, today announced that following discussions at the Student Roundtable in Canberra, students who have taken a gap year and must move to attend university will be entitled claim independent status for Youth Allowance under the existing system until 30 June 2010.

Ms Gillard met with students from across Australia earlier this week to hear their concerns over changes to the Youth Allowance system designed to make assistance available to more students.

Despite more than 100,000 students being better off as a result of the changes to the parental income test and almost 150,000 students benefiting from new scholarships, some students who had chosen to take a gap year in 2009 would have been disadvantaged during the transition between the two systems.

The changes announced today will mean students who left school in 2008, have taken a gap year this year and who must leave home to attend university will be entitled to apply for independent status under the existing system.

This change will mean that students will not be caught up in the transition between the old and new systems.

To pay for the change, the alterations to the amount a student can earn before affecting their youth allowance will be deferred by 18 months. Students are currently able to earn $236 a fortnight before their Youth Allowance payment is affected. This will now rise to $400 a fortnight on 1 July 2012.

Under the proposed Youth Allowance arrangements all students who receive the allowance will be entitled to new Student Start Up Scholarships worth $2254 per year.

Students who have to move to study may be eligible to receive $4000 in their first year and $1000 each subsequent year in a new Relocation Scholarship scheme. This means that these

students will receive $6,254 in the first year of study and $3,254 in subsequent years in scholarships alone.

Parents with two students living away from home will also be able to earn up to $140,729 a year before benefits are cut off under the new system, instead of less than $80,000 a year under the existing arrangements.

These parental income test changes mean that many students will no longer have to claim independence from their families and be forced to take a gap year to be eligible for youth allowance. Studies show that of students who take a gap year, around 30 per cent do not subsequently take up their university offer.

The changes to Youth Allowance were recommended in the Bradley Review into Higher Education as a way to have the allowance better support those who need it most.

Under the former Government, participation in regional universities fell and almost 1 in 5 students receiving independent Youth Allowance and living at home had a family income above $150,000 a year. Three percent came from families who earned above $300,000.

Under the changes 68,000 students who would have been excluded previously will now receive Youth Allowance, and 35,000 will get higher payments as parental income tests are lowered, the age of independence is lowered and more thousands scholarships are offered.

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