Lobby groups have backed an Australian senator¡¯s bid to ease the burden of student debt by removing indexation and lifting the repayment threshold.

A coalition of academic and postgraduate associations has supported a to freeze outstanding debt and remove repayment obligations on graduates earning less than the median wage.

In a to a Senate committee, Public Universities Australia (PUA) says years of tweaking have altered the loan scheme so profoundly ¡°that it no longer functions in the manner originally intended¡±.

PUA says the original premise of the ÖйúAƬ Loan Programme (Help) was that graduates would face repayments only when they ¡°began earning a comfortable income¡±. But repayments?are now required on salaries above about A$48,000 (?26,500) ¨C far below the median income of A$65,000.

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A second premise was that students¡¯ outstanding debt would maintain its ¡°real value¡± through annual indexation aligned to the consumer price index (CPI). But with CPI now nudging 8 per cent, this year¡¯s indexation ¨C due to be applied on 1 June ¨C was likely to exceed the repayment rate for many graduates, leaving them with snowballing debt.

This is ¡°unethical¡± at a time of economic uncertainty and rising inflation, the submission says. The current inflation rate?might not be a ¡°one-off¡± given the CPI¡¯s exposure to ¡°volatile global markets¡±, it adds, saying that if indexation is to be retained it should be tied to the ¡°far more stable¡± wage price index: ¡°If wages continue to grow with inflation ¨C as they should ¨C the disparities we have highlighted would not exist.¡±

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In a separate submission, the National Union of Students (NUS) warns that graduates¡¯ repayments ¡°will be completely wiped out by inflation¡±. It says the government will profit by around A$670 from the average student loan next year, by obtaining money at the Reserve Bank of Australia (RBA) cash rate ¨C currently 3.6 per cent ¨C and effectively loaning it to students at CPI.

The NUS says indexation should be frozen for two years while inflation remains ¡°elevated¡±, and then reapplied at the RBA cash rate.

Greens education spokeswoman Mehreen Faruqi, who introduced the bill into parliament, said the submissions to the Senate committee had revealed ¡°overwhelming support¡± for her proposals.

¡°Rising student debt is impacting people¡¯s mental health, causing young people to rethink further study and making it harder for them to access personal loans,¡± Dr Faruqi said. ¡°[It] will further entrench inequality, with women and young people¡­bearing the brunt.¡±

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Former education?senior civil servant Mark Warburton has condemned the current structure of student contributions as ¡°an inequitable mess¡±. In a to the Universities Accord panel, Mr Warburton?says repayments should be levied at a single rate ¨C not 18 separate rates, as occurs now ¨C and only on the ¡°marginal¡± earnings above the repayment threshold.

The threshold should vary according to debtors¡¯ family circumstances, he adds.

University of Melbourne policy expert Gwilym Croucher said that, although Help had been ¡°one of the most important elements¡± in Australian ÖйúAƬ¡¯s success, it warranted periodic review.

¡°We¡¯ve got an overall good system, but that doesn¡¯t mean there aren¡¯t areas for improvement. If [there are] particularly poor outcomes for certain groups of people, then we should absolutely look at it and see what the remedies are.¡±

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The Senate committee is conducting a into Dr Faruqi¡¯s bill in Sydney on 17?March.

john.ross@timeshighereducation.com