Doubtful debt called key to certainty

A neater way of recovering Hecs from former students currently overseas would be to charge interest on their debt while they were overseas. This would not only remove the subsidy on loans while former students were overseas but also, I expect, encourage voluntary repayments.

This suggestion was made by Bentley, Peter (2014) Comment on Hansen, Alexandra (2014) Chasing unpaid student loans could save government $800m, the Conversation, 7 April, retrieved 9 April 2014 from

https://theconversation.com/chasing-unpaid-student-loans-could-save-government-800m-25321#comment_353344

Peter Bentley
logged in via LinkedIn
In reply to Andrew Norton

‘It seems that there is general agreement that the number of graduates who leave Australia is small and the vast majority who leave come back at some stage (this was also the view of Chapman in today’s The Australian article). So, the main benefit I can see is in reducing the interest subsidy by speeding up repayments. Catching those who move permanently overseas would be a bonus, but I doubt this is a large group.

‘However, wouldn’t a far simpler approach be to remove the interest subsidy on debt during years where debtors are not residents in Australia? It wouldn’t speed up repayments, but it would ensure the interest subsidy is minimized. I would think this would be a very simple approach to administer, much cheaper than chasing down people in customs as they return to visit mum on a holiday.

Gavin Moodie
RMIT