29/03/2016 11:40 AM AEDT | Updated 15/07/2016 12:51 PM AEST

Grattan Institute Recommends Lowering University HELP Fee Repayments via Getty Images
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The federal government is targeting ex-pat university students and even dead ones to recover student loans, and now the poorest of graduates are in the firing line in a crackdown on recouping loans.

The government has been advised to dramatically lower the threshold at which students have to start paying back their debts to Higher Education Loan Program, to recoup more to fund the university sector. Currently, graduates need to earn $54,126 before their pay checks are garnished to begin paying their student loans; a report released by the Grattan Institute recommends lowering that mark to $42,000.

The report, 'HELP for the future: Fairer repayment of student debt,' claims that $1.6 billion lent under the program in the 2014-15 year, one-fifth of the lending under the program, would not be repaid. The report lays major blame for that at the feet of a workforce relying more on part-time and casual work, meaning many graduates struggle to earn enough to reach that repayment threshold and thus do not pay anything back. By lowering the threshold to $42,000, the report claims, would "increase total HELP repayments by at least $500 million a year".

Under the system proposed by the Grattan Institute, people earning between $42,000 and $45,360 -- who currently do not repay their HELP loans -- would pay three percent of their income to their HELP debts. That would mean a hit to the hip pocket of $1260 a year for low earners. The rest of the repayment system would scale up. People earning the current minimum threshold of $54,000 now pay four percent of their wage to HELP repayments; Grattan's model would apply that four percent repayment to people earning between $48,988 and $52,907, while someone earning $54,000 would see their repayments rise from four percent under the current model to five percent.

The top bracket of repayment, eight percent, would drop from a threshold of $101,900 to $90,669.

"International experience suggests that even with a lower threshold, students are still attracted to tertiary education. The English student loan repayment threshold is set at a level similar to $42,000, while in New Zealand the threshold is much lower," Grattan's report claimed.

Grattan explicitly states that part of the rationale behind the changes would be to target young women who may be working part-time or who leave the workforce to start a family. The report stated 60 percent of domestic students in 2014 were women, while two-thirds of VET FEE HELP borrowers were women.

"One of HELP’s major doubtful debt risks is women leaving fulltime work before repaying," the report stated.

"The reform would affect more women than men, due to high rates of part-time work. Yet half of the debtors who would be affected live with a partner, and the combined disposable income of 70 per cent of these couples exceeds $80,000 a year."

The National Union of Students strongly opposed the ideas.

"Students are already saddled with a huge amount of debt; asking them to pay that back before they have even reached the average graduate wage ($50,000 - $60,000) means imposing even further inequality on students in order to justify budget cuts by a government who has shown no regard for student needs," said NUS National President Sinead Colee in a statement.

"In 2013-14 a $42,000 threshold would have doubled the number of graduates aged 25 or under who made a HELP repayment. That’s a huge amount of gradautes with a new hole in their already modest income. Future students are already being asked to take more of the financial burden than ever before and Mr Norton’s proposal will only further discourage students from attending university and make life even more difficult for those who do."

"At a time when the government should be trying to make niversity more attractive to students they seem determined to take them for everything they’ve got. We strongly discourage them from adopting Mr Norton’s proposal which would only make the system more unfair."

The proposed changes to repayment of university loans come on the back of the government considering trying to recoup loans from dead students, and last year moving to close a loophole and collect repayments from graduates who moved overseas.

Read the full report here.