Death tax to target student loans

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Federal Education Minister Christopher Pyne suggested yesterday that the Federal Government was looking at introducing a policy to collect student debts from the estates of former students who have died owing money on their student loans.

Branded the ‘death tax’ by Labor higher education spokesman Kim Carr, the policy could pull in up to $800 million per year, according to estimates from The Grattan Institute. Minister Pyne said that there would need to be safeguards in place to ensure the families of young deceased students were not affected.

“[If] an elderly person passes away with a HECS debt, they wouldn’t be able to say to the bank, we’re not paying back our mortgage, yet they are at the moment entitled to not pay back their HECS debt,” Minister Pyne said.

The HECs program was designed in the 1980s by Bruce Chapman who, in a recent interview, said that the inclusion of repayments from deceased estates was in his original proposal.

Read more from The Australian.

Read more from the SMH.

Opinion: Death, taxes and more taxes

It’s not often you will find me agreeing with Minister Pyne, but the suggested policy changes to help the government recoup money from the estates of deceased students makes sense to me.

When you pass away the bank doesn’t simply wipe off your mortgage and your credit card company won’t simply forget about the money which is owed on your cards, they will seek repayment from your estate. So it only makes sense that, in most circumstances, student loans should be paid back in full from the estate of the deceased.

Interestingly, the introduction of a policy to recoup debts may affect a number of the students entering higher education in the coming years. The Australian’s report on The Grattan Institute’s proposal suggests that stay-at-home mums and older people have been taking advantage of the current repayment loop-hole by enrolling in university for recreational purposes, with no expectation of entering the workforce at the end of the course.

What do you think? Is it only fair that outstanding student loans should be recovered from the estates of deceased students? Or are you concerned that this process could adversely affect families in a time of grieving?

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162 Comments

Total Comments: 162
  1. 0
    0

    WHY NOT….. debt claims are made on such matters…if the deceased has nothing then too bad…..but if they do then why not get the loan or some back?

    • 0
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      It would not be fair that some have to pay it back after death and others don’t. Regardless of what Christopher Pyne says, I think it highly likely that families will be made responsible for repaying the debt of rels who die with nothing, if this becomes law.

    • 0
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      Robiconda – not ever going to happen – if the person is broke – that is the end of the story. No ifs, no buts!

    • 0
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      Read my next comment Reasons. The person who dies may be a father or mother who owns half the family home which may have to be sold to repay the debt.

    • 0
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      I think that you are punching at shadows Robiconda. This could not be legally enforceable on extended families unless they were guarantors. Lets not give pipsqueak Pyne the option for that one.

    • 0
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      I told You all yesterday !! You can no more enter the Kingdom of Heaven with Your Wallet than pass through the Azz of a Camel !!

    • 0
      0

      I agree with Robiconda,

      Also, there is the matter of interest that would have accrued. There is no way the government would forgo this issue if repayment of loans is required.

      Retrospective law is always bad law. Once a retrospective law is adopted, then others can also be … and right across the board.

    • 0
      0

      If banks can claim on deceased estates for the payment of outstanding mortgages and other creditors can similarly make claims on deceased estates, why shouldn’t the Government, and hence the taxpayer, be able to claim outstanding amounts for HECS payments from deceased estates?

  2. 0
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    Yes, I would also agree with the proposal to get the money back, regardless of age. The cost is real and has been incurred and so is a legitimate claim. It will also make people think more deeply about doing a uni course if they just undertake it for interest-sake, not a career. The cost is not something that should be eventually foisted onto the tax payer – and no doubt increase the cost of uni courses to others.

  3. 0
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    There should be inheritance taxes full stop. It is not the responsibility of tax payers to protect the kids’ inheritance.
    Certainly collect outstanding loans from deceased estates where are heritable assets.

    • 0
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      I already paid taxes on the money earned to pay for my possessions, including the money I worked hard for and earned to pay for my house. When I die, after all debts/expenses are paid, what remains goes to my kids. For anyone who has bludged off the taxpayer purse, or who has enjoyed cheap taxpayer funded housing, they probably don’t know that inheritance tax is a disincentive to aspire and prosper.

    • 0
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      Give it a break Travellersjoy. Are Australians not close to the most highly taxed people on the planet already? Whilst I predict that this most greedy of all governments will try and bring Death Duties back down the track I assure you that I will be out of here if they try because the new proceeds of my life are not available to a greedy political party wanting to transfer my life’s work to the riches amongst us, a process which has already begun under the noses of average Australians who would not have a clue.

    • 0
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      There is one advantage …(1).. It stops the rellies Brawling over it !!

  4. 0
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    A move such as this would be fraught with dangers. Take for example the following scenario: a person I know worked hard and bought a house with partner owing a fairly large mortgage. This person then did a science degree in his late 20’s, attending Uni full time plus working shift work hours. Not easy to find work with science degree so followed up with a 4 year medical degree. Next year he will begin work as an intern on $65,000 pa. He has a HUGE Hecs debt which will take quite a few years to pay back. Imagine if he died in the next year or two. His partner would be forced to sell the house to repay the debt.
    This is only one scenario. I imagine many people would be caught into having to find such ways (such as selling a house or taking out a new mortgage etc) to repay their loved one’s debt at a time when they are grieving.

    • 0
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      Ever heard of insurance policies? So many of the degrees available at uni are absolutely useless when it comes to getting a job, so don’t do them and then expect the taxpayer to foot the bill.

    • 0
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      I am unaware of the American system but what about that lady of 90 odd doing
      a degree? IF she paid to do it all well and good. I know of someone who did a
      degree/Phd …. never used it – just something to pass the time. I understand
      that in Sweden uni loans have to be paid back but this info is subject to
      confirmation. I think it’s great to better oneself but at one’s own expense.
      I’m sure doctots and lawyers and those of this ilk could scrape a bit of cash
      together to pay their own bills once graduated.

    • 0
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      It is highly unlikely to be retrospective if implemented – but risk would have to be considered thereafter like any other debt.

    • 0
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      If he died in the next year or 2 and still has the big mortgage, the house would probably be sold to cover that anyway. As he owns part of that asset it is part of his estate. The estate should pay back all his loans, the mortgage and the student loans. He clearly needs insurance.

    • 0
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      O ! What a wicked web we weave when first we practice to Achieve !!

    • 0
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      Particolor your web is surely in its embryonic stage!

    • 0
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      A Misconception even !!

    • 0
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      Yes particolor you were a misconception.

  5. 0
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    Agree PIXADP, it is fair that they repay the cost of their education, but if they die of old age and have not repaid, they must have spent their lives at Uni (like some still do). Surely if one has a University degree they have enjoyed the fruits of that endeavours ie higher salary and their estate should pay any outstanding amounts.

  6. 0
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    I totally agree with collecting student debts from the deceased estate. Why should they be any different to the rest of the population. Kindly remember a student can be $50,000 or more and still outstanding when the student is working in their chosen profession. If they have an estate then the Government has an obligation to recover these funds. I as a taxpayer demand they do, after all it is our hard earned taxes that fund these student loans that become debts. If those who object were a business and had outstanding loans to students would they simply forgive them or would they claim on the deceased’s estate?
    As there are many more of us getting older and leaving the workforce the number of citizens working is not growing at the same level, do the sums less tax is being paid. Our country cannot afford anything unsustainable like not collecting debts owed to the Government.

  7. 0
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    It should be repaid long before they die. No HECS loans should be given to students whose parents have not paid back their loans (talk about throwing good money after bad!). And those who don’t pay will now probably soon be offered an insurance policy to cover said debts – absolve them from the acute embarrassment of not having paid it off sooner.

  8. 0
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    Good grief what’s next? The b’s oops sorry that should be greedy B’s, as if they’re not etting enough now with Bank accounts being targeted what next death duties on deaths? Fir instance my Brother in law died without making a will the Bank concerned will not listen to us, his two brothers plus his kids whi were here for the funeral. One brother banks with them doesn’t matter we can’t prove who we are, so they say So the money left for his funeral goes to the Government while the ex wife & the kids pay the funeral costs,

    • 0
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      Yes but that’s his Ex-wife i.e. no legal standing, his kids… over 18? Not financially dependant on him? Then no legal standing. His brothers? Not financially dependant on him? No legal standing. So why would you think the bank would/should simply hand over any money in the deceased person’s account?

      Moral? Make a will and keep it up to date. It doesn’t have to be hard.

  9. 0
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    Robiconda, responsibility must be taken by these students, for your scenario I bet the financial institution holding the mortgage has made damn sure mortgage insurance is in place.With the student working then there will be superannuation being paid which will have a death benefit Go figure both of these can be used to pay the mortgage out and the student debt off. No need to sell the family home.
    We took appropriate precautions by having insurance, I will not be leaving unpaid debts when I die all because I have insurance.
    Enter the adult world, take adult responsibility for your debts.

  10. 0
    0

    I think the cigar kid, should start with the fat that is wasted in his own department, then finish with the rest of Federal parliament. I want some journo to ask Ernie damn I mean Matty how many pollies and there servants, he has on his books, a lot of fat to be trimmed there.

    • 0
      0

      I think that Christopher Pyne needs to pay up for his law degree which he got for free. Bring back the Green Hornet to get it.

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