What We Can Learn From Australia’s Student Loan System?

Marissa Brassfield, PayScale
Jul 09, 2013

The Australian student loan program lets each student know how much money they have in their loan account, ensuring that they are aware of when the money will run out and when their government support is over. If the student is continuing education by getting a master’s degree, for example, they will receive supplemental funds. Since the financial aid runs out by a certain date, students are forced to complete their studies before that time, which avoids those who attempt to stay in the student loan system for as long as possible.

During the repayment period, the up-front fee basically remains consistent and the system allows for people to interrupt their repayment plans if they plan to continue their education, need to take time off work, or are dealing with personal issues. Interest on repayments does not accumulate, but is determined by the Consumer Price Index. When the loan costs rise and/or fall, it is simply due to the country’s economic state.

Repayments on student loans in Australia begin when the borrower begins making a salary of $45,000 a year. There is no grace period or deferment, and the repayments begin immediately when the borrower begins earning the threshold income, even if they are still a student. The amount of each monthly payment is based on how much the borrower makes — the more they make, the higher their monthly payments are.

Finally, the repayments are collected by the Australian Tax Authority instead of the Department of Education. This ensures that there are no defaults and gives the borrower the option of having the repayments deducted from their payroll, or made through their annual tax assessments.