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Pros and Cons of Student Loans

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It is true that the Australia students’ loan scheme is different significantly from that of the U.S., and those distinctions are clear.

For instance, U.S. student loan users who opt for the typical, 10-year repayment plan will see their monthly payments remain the same throughout the term of their loans regardless of how much they earn. In essence, it’s similar to the mortgage payment.

However, this isn’t the case with Australia’s Australian Student Loan system in which income is the primary factor that determines repayment.

How do 留学生贷款 options in Australia function

Under the Australian student loan system, the government-administered Higher Education Loan Programme (HELP) provides interest-free loans to university students. Instead of charging interest on student loans rates the balance of the loan is calculated based on costs of living rises.

Under HELP the borrowers don’t need to make repayments until they reach the threshold of a certain amount and then the numbers are adjusted each year. The repayment for the academic 2020-2021 year starts with 1% of the borrower’s income when it reaches an amount of 46620 Australian dollars (about $33,300).

The amount of the loan increases depending on the amount that the borrower earns. In addition, there are additional thresholds for income, ranging from $165,000 to the amount of 136,740 Australian dollars (about $98,000) and beyond, after which the repayments are determined at the highest 10% of the income. This means that Australian students who get lucrative jobs straight out of college are able to pay off their debts fast while those whose income remains low will have less of a repayment obligation.

This means that an Australian college graduate is able to pay off their debt from education within 8 or 12 years as per an 2017 New York Times report. The U.S., the average length of time to pay off student loan debt is 17 to 20 years, based on factors like:

Your balance
Repayment plan
The location where you reside while making payments

Imitating similar to Australia students loan program of the U.S.

One important point to be aware of regarding how the U.S. student loan system The reason is that when the president Lyndon B. Johnson signed the Higher Education Act of 1965 -that included, among other things, gave financial aid for students — less students went on to college and tuition was lower than it is today.

Johnson was a good man when designing these educational programs but he certainly couldn’t have imagined how expensive the cost of college would be within the next few years. While this law was revised since its original passage but the scale of the students’ debt problem indicates further changes are required. (For more information on the magnitude of U.S. school debt, take a look at our debt on student loans calendar.)

In reality, the disparities in Australia and the U.S. and Australia in the costs and the size of higher education are major obstacles to the integration of the system of Australia to. In Australia taxation is an enviable portion of the gross domestic product of the country as well as Australia additionally has smaller population that those in the United States does.

“To launch a program similar to the one in Australia’s HELPin America could have a huge economic impact due to the sheer size of the people living there and the sheer number of institutions of higher education,” said Michelle Hutchinson who is a personal finance communications executive and a graduate of Macquarie University in Sydney, Australia.

Imitating an equivalent system to Australia students loan program that is in place U.S. could lighten the burden for borrowers, however it will require a massive investment of capital to launch programs such as HELP.

“The economy will benefit , but it will be in the medium to long term benefit if that happens,” Hutchinson said.

Members of Congress and presidential candidates to the White House in the U.S. have been actively campaigning on plans to cut costs for college in addition to making student loan more easy to pay back. Some have even suggested the idea of making all public schools free or removing current student loans. However, only time will tell which of these ideas are implemented, or if they are a step in the right direction. U.S. can move to an Australian approach to dealing with student loans.