Student loans to become Australia's leading source of public debt by 2026: report

The annual cost of Australia's student loans program will blow out by almost 500 percent in the next decade, according to an independent report on the future of the government-funded program.

The Parliamentary Budget Office's report estimates that student debt would climb from around 38 billion U.S dollars in 2016 up to 136 billion U.S dollars by 2016, thanks to a government decision to allow universities to set their own fees.

It said that decision, and subsequent rise in university fees (which are still paid by the government) would push the national debt to record levels.

Consequently, the report also said the program - called the HECS HELP scheme - would cost the government up to 3 billion U.S dollars every year come 2026, as the number of unpaid loans continues to rise.

According to the paper, student loans would account for 18.3 percent of national debt within a decade, up from just 4.8 percent in 2026.

The report's estimates come as a result of government policy which currently states student loans cannot be reclaimed from graduates earning less than 41,000 U.S dollars per year. Those who move overseas to work are also currently exempt from paying back the loans as the government has no jurisdiction overseas.

Also according to the report, the number of government-supported student loans (using the HECS-HELP scheme) has grown by more than 11 percent over the last five years to 522,000 full time places.

The loans are given to any Australian student studying at university, and repayments are taken out of their salary once they secure full time work which pays a salary of more than 41,000 U.S. dollars.

Interest on the student loans is pegged to inflation so students are not paying more than their course is worth.

The report is expected to be a catalyst in an amended government policy for the higher education scheme, which is set to be revealed when the federal budget is handed down in early May. Endit