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Speech: Student Financial Supplement Scheme

Speeches in Parliament
Mehreen Faruqi 3 Dec 2019

I rise to speak this evening about the ongoing impact of student debt on the community. I call on the government to forgive outstanding debt from the grossly unjust Student Financial Supplement Scheme. This scheme was a rort that targeted low-income and disadvantaged students from the start. For the government to continue to collect debts 15 years after its abolition is simply unconscionable. From 1993 to 2003, the Student Financial Supplement Scheme encouraged students, including minors acting without their guardian's authority, to trade in their youth allowance for a loan. For every dollar of income support a student gave up, they incurred $2 in debt. The scheme was always fundamentally unfair to students. When the Howard government shut it down in 2003, the then Minister Anthony described it as a costly, poorly targeted and inefficient way to reduce financial barriers to education that came at a high cost to students and Australian taxpayers. He acknowledged that the trade-in mechanism of the SFSS had been of great concern to students and student organisations. At the time, the government actuary estimated more than 50 per cent of loans may never be repaid. This estimate has proven correct. Right now, they expect barely 40 per cent of the outstanding debt to be repaid, a real sign that the scheme didn't care whether students would be able to repay their debts.

Tragically, the costs and concerns of students about the long-term effects of the SFSS have been realised. While more than 15 years have passed since the scheme's abolition, its harms continue to be felt by more than 88,000 Australians with standing SFSS debts. These people owe just over $1 billion, an average debt of about $11,600 each. Many people with SFSS debt have told me their stories and how the scheme continues to impact their lives. Sarah was 16 and living out of home when she was allowed to take on an SFSS debt. Now living with a chronic illness, she told me she's exhausted and worried that she's still paying for a childhood that was beyond her control. Edward, who came from a low-income family, told me he felt the scheme was deeply unfair and preyed on the most vulnerable. Despite having repaid almost $40,000 towards his debt, he still owes about $44,000. Many others, like Donna, have told me they had little idea what they signed up for and have struggled to access information about their debts in recent years. Stuart, who told me, 'I feel this debt will never be paid off,' described the overwhelming unfairness of the scheme when he said:

I was entitled to my Youth Allowance like all teenagers, but trading in $1 of my Youth Allowance for $2 and owing the $2 back seems like a scam.

Hayley, who works in education, told me:

As an Aboriginal woman who works with Aboriginal students, I hesitate to recommend university to students who will need to access HELP debts as I know that they will have this debt against their name for many years to come.

These stories indicate the real imposition the SFSS continues to have on its debtors. It limits their choices and opportunities, in some cases affecting their ability to get home loans. It colours their lives with the psychological impact of living with a debt they know to be unfair. Time and again people have told me they expect to be living with this debt for the rest of their lives.

It's time to ditch the debt. This has been allowed to go on for too long. The inescapable unfairness of the scheme makes demanding any repayment from its victims unfair. In recognition of its unfairness and the lasting harmful impact the scheme has had on its participants, I'm calling on the government to forgive all outstanding SFSS debt. This is a vital step to bring closure and justice to Australians caught in the scheme, and it's not without precedent. This year the Morrison government has waived nearly $500 million in unjust VET-FEE HELP debt that should never have been issued. That's more than the value of all outstanding SFSS debt. They must now do the same for the victims of the Student Financial Supplement Scheme by abolishing their debts.


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