Death tax to target student loans

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?

Written by Drew

Starting out as a week of work experience in 2005 while studying his Bachelor of Business at Swinburne University, Drew has never left his post and has been with the company ever since, working on the websites digital needs. Drew has a passion for all things technology which is only rivalled for his love of all things sport (watching, not playing).