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Since its introduction in 1989, the Higher Education Loan Program (HELP) has greatly expanded access to tertiary education in Australia. But with $52 billion of HELP debt outstanding, this report argues that the government has to find ways to control its costs. It is proposed that a 15 per cent loan fee on all new tertiary education lending could save the Commonwealth $700 million a year and make HELP more affordable for government. The fee would help to offset the government's interest costs, while being fair to all students and preserving the loan program's social goals. As now, there would be no upfront charges with a universal loan fee. The loan fee would be added to the student's total debt and would only affect graduates at the end of their repayment periods when their incomes are generally higher. And because of HELP's income contingent repayment system, students and graduates on low incomes would not have to repay their loan fee. But loan fees would encourage students who can afford to pay upfront to do so. Loan fees are both fair and necessary. Without change, HELP's costs will escalate, risking damaging cuts to other education programs.

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The Student Loan Scheme Annual Report has been tabled in Parliament each year since 2001 and provides public accountability information to government and New Zealanders to show that the scheme is achieving its primary objective - ensuring that tertiary education is financially attainable to all New Zealanders. Each report provides information on the loan scheme and its performance, as well as statistics on those borrowing under the scheme and their repayment behaviour. In addition, each report contains financial schedules for the most recent fiscal year.

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This report presents the outcomes of modelling of the potential costs of an income contingent loan (ICL) that would form a core element of a tertiary education entitlement, as proposed in the Mitchell Institute paper 'Financing tertiary education in Australia: the reform imperative and rethinking student entitlements' (Noonan and Pilcher 2015). The tertiary education entitlement is intended to be a coherent and practical Australia-wide system that provides guaranteed funding support for tertiary education to a particular qualification level through course subsidies and access to an income contingent loan. As outlined in the Noonan and Pilcher paper, the entitlement would have two core funding elements: (1) a direct subsidy - paid by either a state/territory government and/or the Commonwealth government, and based on eligibility to the entitlement; and (2) student contributions - initially paid by the Commonwealth to the provider with students taking out an ICL with the Commonwealth. In this report, the authors consider ICL design options and associated cost implications of a single universal ICL scheme that could apply to tertiary qualifications which, importantly, includes Certificate III and IV. The report examines the sharing of tertiary costs between students and all taxpayers, with a particular emphasis on ICL subsidies.

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