The federal government will dramatically reduce the level of bad debt in its $50 billion portfolio of student loans following budget changes that will lower the income threshold for repayments down to $42,000 a year.
The budget papers say the proportion of new student loans which are not expected to be repaid will fall from 23 per cent this year to 17 per cent, which will help resolve the growing cost of unpaid student loans.
Last week, in an announcement which pre-empted the budget, Education Minister Simon Birmingham said the annual income threshold for repaying student loans would fall from its current level of about $56,000 to $42,000 from 2018-19.
Graduates earning $42,000 to $44,250 will pay only 1 per cent of their income…
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