The Prime Minister has promised to ease HECS-HELP debts, but now former students who were in a separate ‘debt trap’ in the 1990s want their outstanding payments canceled.
About 140,000 Australians still owe $2.1 billion on the Student Financial Supplement Scheme, which ran from 1993 to 2003.
Under the Keating government scheme, students on benefits such as Austudy or Youth Allowance could trade in their rights in exchange for twice the amount as a loan to pay for everyday expenses.
The Student Financial Supplement Scheme was introduced by the Keating Government in 1993. (Getty/impressions)
They could essentially double their money by returning their benefits, but had to pay back double.
The Howard government scrapped the plan, calling it a “debt trap.”
Some in the program told 7.30pm that they did not fully understand what they were signing up for when they were young and vulnerable.
Dee Marshman was 17 and in her first year of college when she was offered the loan in 1997.
Dee Marshman joined the Student Financial Supplement Scheme at the age of 17. (ABC News: Jason Om)
“I remember it sounding like a solution to me at the time,” Ms Marshman told 7.30.
“Looking back, obviously at the age of 17 I had no financial knowledge whatsoever.”
She exchanged approximately $17,000 of her rights for double the amount, a total of $34,000, over five years.
Ms Marshman said she had a tough time when she applied for the programme.
“I experienced homelessness, I was kicked out of my home, I came from a very dysfunctional family environment,” she said.
“When I applied for the loan, I had no money, no resources, I didn’t even have many personal belongings.
“I remember one time I had to move and I moved in a shopping cart. I had a single bed mattress that I put on top and rolled across the street.”
Mrs. Marshman has spent nearly 30 years trying to pay off her debt, which is now only about $18,000.
“I’m almost 46 now and it feels like a life sentence.”
Hundreds are showing interest in possible legal action
More than 350 people involved in the program have expressed interest in pursuing their legal options against the government.
Lawyer Andrew Grech said at 7.30pm that he believes the students – who were only 16 years old – were not fully aware of their obligations.
Lawyer Andrew Grech says vulnerable young people had no way of knowing what they were signing up for. (ABC News: Nadia Daly)
“These were young people, these were vulnerable people. They were people who could not have understood what the results of that (plan) would be, and as a result they found themselves in a position that no one intended. “
Mr Grech also believes the Commonwealth Bank has a case to answer because it managed the loans before the government took over.
“If someone wants to enter into an agreement, they need to understand its terms, and it is the job of a financial institution, such as a bank and a government agency, to ensure that they enter into that contract in a fully informed manner. basis and that the terms are not unfair or unconscionable.”
The Commonwealth Bank referred the 7.30am questions back to the government, which it said was responsible for the scheme.
Commonwealth Bank managed the loans before the government took over. (ABC News: Jerry Rickard)
Ms Marshman said at 7.30pm she felt misled.
“We were in a lecture hall and it was presented to us, this concept of the financial supplement scheme for students (but) it was not presented as a loan, it was not presented as a debt.”
The Albanian government is resisting calls to cancel its $2.1 billion debt
Earlier this month, the federal government announced it would reduce HECS-HELP debt by 20 percent by June next year.
The government is resisting calls from the Greens to wipe out the SFSS debt. (ABC News: Cason Ho)
This one-off discount would also apply to debts under the Student Finance Regulations (SFSS).
But former students want the government to completely cancel their debts, as the Greens have demanded.
Deb Woodbridge owed approximately $35,000, peaking at $42,000 with indexing.
It took her 20 years to pay it down to $7,500.
Deb Woodbridge still owes the government $7,500. (ABC News: Jason Om)
“(It) seemed like it would be amazing, especially at the time when I was a poor student, that it would make things so much easier,” Ms Woodbridge told 7.30.
“I didn’t really understand what this loan was about and I would have to pay back double.”
Of the $2.1 billion still owed, the government expects to recover $180 million in repayments.
Social Services Minister Amanda Rishworth declined to be interviewed but told 7.30pm that the loans were due once an individual’s income reached the repayment threshold.
“The intent of this system is to protect people from repayment obligations by basing repayments on their ability to repay rather than the total value of their debts,” she said.
Ms Marshman told 7.30pm that the Government had to go further on the cost of living crisis.
“I think it is the prime minister’s responsibility to address this, otherwise we will just see the cultivation of generational poverty,” she said.
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