About 65,000 people could be forced to start repaying their student loans sooner as part of the Abbott government’s plan to lower the income threshold, new figures reveal.



The government has disclosed extra details about its university plans in answers to questions placed on notice at budget estimates hearings, including the effect of reducing the salary level at which repayments must begin by 10%.

Officials also confirmed that the government had not budgeted any of its own money towards the new “commonwealth scholarships” scheme and that universities would not be required to start contributing until after fees had risen to meet the shortfall in revenue created by the average 20% cut to public subsidies.

The information was released as the education minister, Christopher Pyne, signalled his willingness to compromise on aspects of the changes, including the proposed increase to interest rates on student loans, in an attempt to secure Senate approval. Pyne said he was committed to the changes to be presented to parliament late in August, and argued that moving from a 60:40 split in government-student contributions to 50:50 was fair.

On Monday Labor was due to begin a campus-based campaign against forcing students to serve a “debt sentence”, emboldened by Clive Palmer’s declaration that the Palmer United party (PUP) senators were not open to dropping their opposition to university fee deregulation. Labor, the Greens and the PUP have the numbers to block the changes.

The opposition leader, Bill Shorten, will visit the University of Melbourne on Monday to launch a petition against cutting commonwealth funding for undergraduate degrees, allowing universities to set their own fees, and applying a “real, compounding interest rate” on Higher Education Loan Program (Help) debts.

“Every student will pay for Tony Abbott’s broken promise of ‘no cuts to education’ and many will be forced to give up the dream of a university degree,” Shorten said.

One aspect of the government’s plan that has attracted relatively little attention is the lowering of the repayment threshold for Help loans to an income of $50,638, or 90% of the current level.

The Greens’ higher education spokeswoman, Lee Rhiannon, asked officials at budget estimates hearings to reveal how many graduates would be affected by this specific measure, due to apply from 2016.

In a recently published response, the Education Department gave an estimate of the numbers: “The Australian Government Actuary (AGA) estimates that in 2012-13, there were approximately 65,000 Help debtors with an income between the minimum repayment threshold and 90% of that threshold (where the new 2% rate will be applied).”

In a speech last week, Pyne said the government was keeping the “world class” system commonly known as Hecs, and students would not have to repay their contribution “until they are earning a decent income”.

The minister promoted the new commonwealth scholarships scheme as a way to help students from disadvantaged backgrounds meet their costs of living, relocation, mentoring and support while studying. “These new arrangements will mean our smartest students can receive a world-class education no matter what their background might be or where they are from,” Pyne said.

In response to questions from Rhiannon, the department said the scheme would be funded by the requirement that $1 of every $5 of additional revenue a higher education institution received be dedicated to scholarships. This 20% requirement would be calculated by comparing the combined income the university received under the current arrangements, including Commonwealth Grant Scheme funding and the maximum student contributions, with “the income generated from student contributions and commonwealth grant funding under the new arrangements”.

It was unclear how much money would be available for the scheme because this would depend “on the pricing decisions of institutions”.

Rhiannon said the department’s response demonstrated the scheme was “a sham” and “a fig-leaf to defend the inequity inherent in a deregulated system”.

“It has been confirmed that if universities increase student fees to make up for a reduction in government funding, not a single dollar of that additional revenue will be used to establish equity scholarships,” Rhiannon said.

“Just last week Mr Pyne said he didn’t expect fees to increase significantly under a deregulated system. However unless fees do increase significantly to make up for funding cuts, estimated by Universities Australia to be 30%, these commonwealth scholarships won’t exist. Mr Pyne can’t have it both ways. Either fees will increase exorbitantly or commonwealth scholarships won’t exist.”

Labor’s higher education spokesman, Kim Carr, asked officials how much commonwealth funding had been allocated over the next four years to the commonwealth scholarships scheme. “Nil,” the department replied.

Officials said the government had decided not to require institutions with fewer than 500 commonwealth-supported students to put money into these scholarships because it was “a reasonable threshold below which the returns would not justify the administrative effort”.

Carr said the scheme was “Orwellian in its description because there’s no commonwealth money in it at all”.

“This isn’t a ‘commonwealth’ scheme; it’s a con,” he said.

“For many universities it’s going to be hard to raise any money for scholarships. For example, one regional university believes it would net less than $200,000 in 2016 from this scheme – a drop in the ocean. On the other hand big universities will be able to establish significant funds, which will be used to poach students from other universities rather than helping the disadvantaged.

Carr said the scheme was “not an equity measure, but a marketing tool for the bigger universities to allow them to cannibalise smaller universities”.

“I’ve been visiting a number of universities and the enthusiasm for this package wanes substantially the further you go away from the core group within the Group of Eight,” he said.

Pyne told Sky News on Sunday his negotiation with senators could take “months and months” and he would explain the reforms were necessary to make universities modern and competitive and give students the best education possible.

Last week the minister denied breaking pre-election promises on higher education, insisting he was “not raising fees” but instead “freeing the university sector to place a value on the courses they offer students”.