Students best bet is to die before loan is cleared

THE only students who will not have to pay back their university loan debt will be those who die before the debt is cleared, a paper from Parliamentary Library reports.

A report on rising Higher Education Loan Program debt from the independent library at Parliament House confirms the prospect that some will die before they pay off their debt.

While Education Minister Christopher Pyne last week suggested he may consider claiming the unclaimed government debts at death, Prime Minister Tony Abbott quickly put a stop to the idea.

But a library paper says if that remains the case, some 20% of HELP debt incurred in 2014-15 will not be repaid - with the government to forego $7 billion in revenue.

"With expected higher debt levels and longer repayment periods, this proportion is expected to increase in future years," it reads.

"Of the $30.1 billion outstanding debt at June 30 2013, it is estimated that $7.1 billion will not be repaid."

Among those likely to die without paying off all their study loans were women who took time off work to have children, with surviving partners and children to take the debt write-off as a "windfall".

"There is no obvious public policy purpose in granting this windfall," the paper reads.

"It is hard to see why the government recovers overpaid social security benefits from deceased estates yet writes off HELP debts."


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