VET-FEE redress scheme extended for 12 months

Students who were lumped with loans by dodgy vocational education and training providers during the Rudd-Gillard governments will have another year to apply for the debts to be wiped, with the redress scheme to be extended until December 2023.

Skills minister Brendan O’Connor will confirm the year-long extension of the VET FEE-HELP student redress scheme on Wednesday, and pledge to waive $1.6 million in indexation on loans for about 6,400 students who were hit unexpectedly with historical debts due to an IT system glitch.

As revealed by this masthead last month, more than 10,000 students suddenly had old VET debts transferred to their Australian Tax Office accounts after an IT system upgrade earlier this year released invoices that had been held up in government systems for years.

“We are determined to put the wellbeing of students first, which is why we have decided that all indexation related to these loans should be waived. The proposed waiver relates to approximately $1.6 million of indexation affecting approximately 6,400 students,“O’Connor said in a statement.

“Affected students will be contacted following the waiver of indexation,” O’Connor said in a statement.

Loading

Under the VET loan system, former students start repaying their debts once they earn above the income threshold, which is set at $47,014 for the most recent tax year. The debts are indexed to the consumer price index, which rose to 3.9 per cent this year.

The government had previously estimated the historical debts totalled $24.2 million and are genuine income-contingent loans that students agreed to and were expected to pay, but the system error meant they were not notified of the debt at the appropriate time.

At the time, deputy opposition leader Sussan Ley accused O’Connor of “quietly approving his department to claw back tens of millions of dollars without fronting up and explaining what is going on”.