Paying for student loans has been a big problem in the United States, and with interest rates for doubtful debts being 21% higher for vocational courses in comparison with higher education, it is no wonder why many worry about finding ways to pay back their debts or simply filing for bankruptcy. Filing for bankruptcy can only wipe out student loans in cases where the debtor can prove that the repayment of the student loan will cause “undue hardship” to him/her and their dependents. This can be very difficult thing to prove, which is why it is better to choose a repayment plan rather than filing for bankruptcy.
A new analysis done by the Grattan Institute states that over a third of government loans from students of vocational education and training will not be paid, with women who work as part-time employees being the majority of the non-paying FEE-HELP group. According to the report, the large volume of unpaid student debts is mainly due to the federal government’s failure to assess the suitability or a potential borrower. Furthermore, there are vocational courses that have worse repayment rates compared to others, possibly due to the lower opportunities of earning more than the required repayment threshold which is A$53,000.
The report, authored by Andrew Norton as a submission on the government’s probe into the providers of private vocational education and training, states that the repayment threshold should be lowered to A$50,000. There has been evidence of people manipulating their taxable income in order to be classified under the HELP threshold, and by lowering the repayment threshold will make the taxable income manipulation harder to do and would help reduce the percent of doubtful debt from 40 to 30 percent. As of the moment, there is already a provision being passed under the current legislation to end eligibility to certain education providers and courses.