The Australian student loan repayment system may be introduced if a Government report finds it better suited for third level education borrowers in Ireland.
Australian students can choose to take out an income contingency loan (ICL). This means they begin repaying it once their income rises above a set minimum threshold after they graduate, which the government sets.
“If at any point you drop below that minimum income you stop paying until you rise above it again, after 30 years the debt is written off”, said Dr Charles Larkin adjunct lecturer in Trinity College and lecturer in economics and finance in Cardiff Metropolitan University.
Larkin cautioned that unless they develop a proper means to sustain this system they could face a large debt in the future due to written-off loans.
The economist Prof Bruce Chapman who helped set up Australia’s ICL in 1988 said: ‘About 15 per cent never repay in full because their lifetime incomes are insufficient’, according to the Irish Times in relation to studies in Australia.
The system would reduce the debt of many who have to carry the burden of student loans after they graduate from college. It would insure that only those who can afford to repay, repay.