The prime minister has promised to ease HECS-HELP debt but now former students caught in a separate 1990s ‘debt trap’ want their outstanding payments wiped.
About 140,000 Australians still owe $2.1 billion from the Student Financial Supplement Scheme, which ran from 1993 to 2003.
Under the Keating government scheme, students on welfare payments such as Austudy or Youth Allowance could trade in their entitlements in return for twice the amount as a loan to pay for everyday expenses.
The Student Financial Supplement Scheme was introduced by the Keating government in 1993. (Getty/Impressions)
They could effectively double their money by giving back their welfare payments, but had to pay back double.
The Howard government scrapped the scheme, calling it a ‘debt trap’.
Some in the scheme have told 7.30 they didn’t fully understand what they were signing up for, when they were young and vulnerable.
Dee Marshman was 17 and in her first year of university when she was offered the loan in 1997.
Dee Marshman signed up to the Student Financial Supplement Scheme when she was 17. (ABC News: Jason Om)
“I remember it sounded like a solution for me at the time,” Ms Marshman told 7.30.
“Of course, looking back retrospectively, I didn’t have any financial literacy at the age of 17.”
She traded in about $17,000 of her entitlements for twice the amount, totalling $34,000, over five years.
Ms Marshman said she was struggling when she signed up for the scheme.
“I experienced homelessness, I was thrown out of home, I was coming out of a very dysfunctional family environment,” she said.
“At the time I signed up for the loan, I had no money, no resources, I didn’t even have many personal belongings.
“I remember I did have to move house once and I moved in a shopping trolley. I had a single bed mattress, which I put on top of it and I rolled it across the street.”
Ms Marshman has spent nearly 30 years trying to pay her debt off, which is now down to about $18,000.
“I’m nearly 46 now and it feels like a life sentence.”
Hundreds register interest in potential legal action
More than 350 people in the scheme have registered their interest in pursuing their legal options against the government.
Lawyer Andrew Grech told 7.30 that he believes the students — who were as young as 16 — were not fully informed of their obligations.
Lawyer Andrew Grech says vulnerable young people could not have known what they were signing up for. (ABC News: Nadia Daly)
“These were young people, these were vulnerable people. They were people who could not have understood what the results or outcomes of that [scheme] would be, and as a result of that, it’s left them in a position which no one intended.”
Mr Grech also believes the Commonwealth Bank has a case to answer because it administered the loans before the government took over.
“In order for someone to enter into an agreement, they actually need to understand its terms, and it’s incumbent on a financial institution, like a bank and like a government agency, to ensure that they’re entering into that contract on a fully informed basis and that the terms are not unfair or unconscionable.”
The Commonwealth Bank referred 7.30’s questions back to the government, which it said was responsible for the scheme.
Commonwealth Bank administered the loans before the government took over. (ABC News: Jerry Rickard)
Ms Marshman told 7.30 she felt misled.
“We were in a lecture theatre and it was presented to us, this concept of Student Financial Supplement Scheme [but] it wasn’t presented as a loan, it wasn’t presented as a debt.”
Albanese government resists calls to wipe $2.1b debt
Earlier this month, the federal government announced it would reduce HECS-HELP debts by 20 per cent by June next year.
The government is resisting calls from the Greens to wipe the SFSS debt. (ABC News: Cason Ho)
That one-off discount would also apply to debts in the Student Financial Supplement Scheme (SFSS).
But former students want the government to wipe their debt completely, as the Greens have demanded.
Deb Woodbridge owed about $35,000, which peaked at $42,000 with indexation.
She has spent 20 years paying it down to $7,500.
Deb Woodbridge still owes the government $7,500. (ABC News: Jason Om)
“[It] seemed like it would be amazing, especially at the time when I was a broke-arse student, that it would make things so much easier,” Ms Woodbridge told 7.30.
“I didn’t really understand what this loan was about and I was going to have to pay back double.”
Of the $2.1 billion owed, the government expects to recover $180 million in repayments.
Social Services Minister Amanda Rishworth declined to be interviewed but told 7.30 that the loans were payable once an individual’s income reached the repayment threshold.
“The intention of this system is to protect people from repayment obligations by basing repayments on their capacity to repay rather than the total value of their debts,” she said.
Ms Marshman told 7.30 the government needed to go further in a cost of living crisis.
“I think that it’s the prime minister’s responsibility to address this, otherwise all we’re going to see is the cultivation of generational poverty,” she said.
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