The " HECS " Question ?

 A suggestion from the  Australian Productivity Commission  has certainly landed the cat amongst the pigeons.  This report recommends the government pursue outstanding education loan money from the estate of debtors who are deceased.  This runs counter to existing policy which simply cancels any debt outstanding from HECs - or " VET " as it is now called, when the student dies.

In many ways this is a strange anomaly.  The law insists that other unpaid debt is recovered from the estate of the deceased before probate is granted, and this includes mortgages, credit cards, utility bills and tax liabilities.  These debts need to be settled before the estate is passed on to beneficiaries named in the will, or close relatives if no will is forthcoming.

HECS was legislated in 1989 to allow students to attend university and gain qualifications that would result in a career.  The cost of this education would be repaid in installments  once the earning capacity reached a level consistent with the gain bestowed by the level of skill earned.  Statistics reveal that about eighty-five percent of such debt accrued is repaid under this arrangement.

Many millions of HEC money is outstanding because some students walk away from unfinished courses and consequently never reach the income level on which repayments are calculated.  Sometimes students are urged to seek qualifications beyond their capacity, or become disallusioned by the study and  abandon the course they have legally agreed to repay.

Others succeed in gaining the desired qualification, and then bolt overseas to a job in a foreign country where they pay tax on their earnings but avoid repaying their education debt to the Australian government, and then there are what are termed " professional students ".  These are people who go on to earn ongoing degrees but never enter the workforce.    Sometimes this is the partner of a high income earner and sometimes a person with a fear of the competitive nature of the commercial world.

The rationale for HECS was very clear.  The government sought to ensure that no students were prevented from gaining university qualification because they could not afford the fees.  Those fees would be held in abeyance until the qualification earned resulted in a salary level which allowed the debt to be gradually settled.  That repayment would be monitored by the Australian tax office.

This recommendation from the Productivity Commission has yet to draw a response from the government but it will cause anguish from the many failed students from yesteryear who abandoned courses and thirty years later have managed to own their own home before the mad ascent of house prices took them to unattainable levels.

Many who both hoped and believed that their foray into higher education which failed has long been written off will find it reappears as a debt against their estate when they die.  Even in a reduced form, it could mean that education debts that exceed $ 100,000 will become a claim on the estate when they die.

That is a question both sides of politics will need to ponder !