University graduates will have to pay back their student loan debts when they start earning $45,000, after the government's higher education reforms scraped through the Senate on Monday night.
Under the current system, people who take out HECS loans to pay for their university degrees do not have to start paying them back until they are earning more than $54,000 a year.
The legislation that passed the Senate last night, 34 votes to 33, means from July 1 next year graduates will start paying back their debt once they earn $45,000.
The debt is paid back at a rate of 1% of their income, or the equivalent of about $450 a year or $8.60 per week.
Tasmanian Nationals senator Steve Martin crossed the floor to vote with Labor and the Greens against the changes. The former independent senator — who replaced Jacqui Lambie earlier this year — flagged his opposition to higher education reforms in his first speech.
"Some would say I'd be crossing the floor against my party; however, I see it as staying true to my word," Martin said.
Martin reasoned that the lower threshold would stop prospective students from undertaking tertiary education, especially in Tasmania.
"Students are one of Australia's most precious resources and we should invest in them," he said.
But Martin's dissent wasn't enough to defeat the bill, as the government had secured the eight crossbench votes required to pass the legislation, including Cory Bernardi, Brian Burston, Centre Alliance's Stirling Griff and Rex Patrick, One Nation's Pauline Hanson and Peter Georgiou, David Leyonhjelm, and Tim Storer.
In defending her backing of the legislation in June, Hanson said graduates would just have to have fewer coffees each week.
"I challenge anyone to say $8 a week will be a hardship on someone on a taxable income of $45,000 a year," she said. "I'm sure they can go without a couple of coffees a week to pay back their obligation to the Australian taxpayer."
Pauline Hanson argues that the HECS repayment threshold for uni grads should be lowered to $45k because: "I'm sure they could go without a couple of coffees a week to pay back their obligation to the Australian taxpayer". https://t.co/YEMWsHuOj3
In a submission to the Senate committee that reviewed the legislation, the Australian Council of Trade Unions highlighted that $45,000 per year is $9,000 more than the annual minimum wage of just over $36,000. The National Union of Students national president Mark Pace also told the committee that the change would overwhelmingly affect women.
"We know from the National Tertiary Education Union's submission to this Senate inquiry that 60 per cent of all Australians with outstanding HELP debt are women and that two-thirds of the Australians who will be dragged into the debt pool with the new proposed repayment thresholds will also be women," he said.
The bill also caps how much students can borrow from taxpayers at $104,440. For medicine, dentistry, and vet science students, it's $150,000.
The government was seeking to cap loans for life but after pressure from the crossbench, students will instead be able to borrow multiple times provided they have paid off enough of their debt to remain below the cap limit.
Education minister Simon Birmingham argued that higher education reforms are needed to curb the number of outstanding loans in the sector, which total more than $50 billion. He said these changes are needed to ensure the sector's long-term viability.
"Estimates are that without the types of changes we're proposing, around one-quarter of that $50 billion in outstanding loans will not be paid," Birmingham said.
The bill will now return to the lower house, where it is expected to pass.