The Abbott government will consider collecting student loans from deceased estates, a move the opposition has likened to a “death duty”.



The education minister, Christopher Pyne, who is already dealing with a backlash from students and university leaders over elements of his planned higher education changes, left the door open to the proposal during an interview with the Australian Financial Review.

Pyne reportedly said he had no “ideological opposition” to collecting debts from the estates of students who still owed money under the loan scheme commonly known as the Higher Education Contribution Scheme (Hecs).

The idea was floated in April by the Grattan Institute’s higher education program director, Andrew Norton, who said the government could save more than $800m a year by 2017 if it recovered outstanding student loans from deceased estates and people living overseas.

Norton, who worked with the former education minister David Kemp on a separate government-commissioned report on university fee deregulation, said the budget accounted for a portion of student loans not expected to be recovered in the future as an expense.

The Grattan Institute report argued the government should stop writing off student debt in deceased estates when estates were worth more than $100,000.

Norton told Guardian Australia the beneficiaries of the existing arrangement were “the children of educated people”.

“You’ve only got limited funds you can spend on higher education and is this really a sensible use of $1bn?” he said.

Norton said the reaction to his report about deceased estate student debts had been “surprisingly positive”.

“I was fully expecting a negative reaction to this when we released the report. But a lot of people felt it was common sense,” he said.

Pyne told the Financial Review the government would consider the move “down the track”.

“If an elderly person passes away with a Hecs debt, they wouldn’t be able to say to the bank, ‘we’re not paying back our mortgage’, yet they are at the moment entitled to not pay back their Hecs debt,” Pyne said.

But he said such a policy change would need “proper safeguards”, such as an age minimum to ensure that the families of young people who died were not targeted.

“This would ensure that families of people who died young owing a Hecs debt would not be penalised,” Pyne said.

Labor’s higher education spokesman, Kim Carr, said the income-contingent loans scheme introduced by Labor was “based on the principle that you repay your contribution only if you benefit from your education through higher salaries”.

“Imposing a death duty by way of having the tax office raid your estate violates this principle,” Carr said. “Also, the minister may well have underestimated the cost involved.”

Guardian Australia is seeking further comment from Pyne.

The minister faces an uphill battle to secure Senate approval for his current package of higher education reforms, which include the deregulation of university fees, the reduction of average commonwealth subsidies towards each person’s degree, and higher interest rates on student loans.

The package also includes the extension of Commonwealth Grant Scheme funding to private providers and sub-bachelor programs.

Labor, the Greens and the Palmer United party have all indicated they oppose the changes. Pyne has conceded he may have to compromise on some aspects to secure parliamentary approval.

A Guardian Australia survey of 17 university vice-chancellors last week showed many had concerns about the changes, including the prospect of loading students with greater debts.