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You are here: ABSTUDY > 7
Benefits and Allowances > 7.16 ABSTUDY Student Financial Supplement Loan
This chapter provides information about the ABSTUDY Student Financial Supplement Loan.
The ‘Student Financial Supplement Scheme, A guide for applicants’ contains the Application and the Agreement form on which the student applies to the CBA for a Supplement loan, and which becomes the contract between the student and the CBA.
The period beginning on the day the contract is made and ending on 31 May in the fifth year after the year for which the loan is paid.
Category 1 students are tertiary students who are eligible for ABSTUDY Pensioner Education Supplement Living Allowance under ABSTUDY Tertiary Award or Masters and Doctorate Award.
Category 2 students are dependent tertiary students who are ineligible for Living Allowance under ABSTUDY Tertiary Award or Masters and Doctorate Award, but who:
The Commonwealth Bank of Australia (CBA), which is the financial institution contracted by the Commonwealth Government to provide loan facilities to eligible students.
The Consumer Price Index is an index published quarterly by the Australian Bureau of Statistics which measures changes in the price of goods and services that account for a high proportion of expenditure by metropolitan wage and salary earner households.
Supplement loan debts are adjusted for movements in the CPI so that they maintain their real value.
A student who is eligible for a Financial Supplement loan under the Student Assistance Act 1973.
The amount of Supplement loan, including any CPI adjustment, owed by the student which has not been repaid.
An optional loan available to some tertiary students under the Supplement loan.
The period or periods in a calendar year for which an offer to apply for a Supplement loan is made to an eligible student.
The period or periods in a calendar year for which Supplement loan is payable to an eligible student.
The Higher Education Contribution Scheme, under which students have to pay part of the cost of their higher education.
The Centrelink Small Benefits computer system. ISS processes claims for ABSTUDY and ABSTUDY Supplement loans and produces payment advice and letters to customers.
The ABSTUDY Pensioner Education Supplement.
The amount of loan actually paid to the student by the Commonwealth Bank for the Supplement loan payability period.
The interest rate charged by the Commonwealth Bank of Australia on the outstanding Financial Supplement debt, which is not added to the student’s debt, and paid to the bank by Centrelink.
If an early buy back of the student supplement loan occurs because of fraud or a failure to notify by the student, the interest that has been paid on the loan by the Commonwealth to the CBA is transferred to the student’s supplement loan debt, that is, the interest paid to the CBA is calculated and added to the student’s supplement loan debt.
Refers to the ABSTUDY Supplement loan.
Amount of ABSTUDY PES or Living Allowance already paid to the student which should have been traded in for the loan.
Trade back forms part of the student’s Financial Supplement debt.
The amount of ABSTUDY PES or Living Allowance that a Category 1 student chooses to give up in return for a Supplement loan. The amount of trade in will be half the amount they wish to receive as a Supplement loan. If the loan payments are backdated the trade in amount will be backdated accordingly. This is known as trade back.
The trade in amount forms part of the student’s Financial Supplement debt.
Category 2 students do not trade in as they do not receive any Living Allowance.
The Student Financial Supplement Scheme is a voluntary loan scheme which gives some tertiary students the option of borrowing money to help cover their expenses while they study. The interest charged on a Supplement loan by the Commonwealth Bank is paid by the Commonwealth Government. However, Financial Supplement debts are adjusted annually for changes in the cost of living based on the Consumer Price Index. A Supplement loan gives tertiary students more choice and flexibility in organising their finances while studying.
Legislation for the Student Financial Supplement Scheme forms part of the Student Assistance Act 1973 with some amendments to other relevant legislation. There is a separate set of ABSTUDY Supplement Regulations.
This table summarises the main steps in the Financial Supplement loan Application process.
|
Stage |
Description |
|
1 |
|
|
2 |
The SEN states the possible trade in (if applicable) and Supplement loan offer amounts, and gives information about the Supplement loan application process.
|
|
3 |
|
The ABSTUDY Student Financial Supplement Scheme was introduced to make student income support programs more flexible and to provide students with greater choice.
The Supplement loan is so named because it is a way of increasing the money available to eligible students, above the amount they would receive through ABSTUDY PES or Living Allowance, and making money available to some students ineligible for ABSTUDY Living Allowance.
The Supplement loan is not like a commercial loan because:
Introduction
This topic explains which students are eligible for an ABSTUDY Financial
Supplement loan.
Eligible students are tertiary students who are undertaking a study workload which enables them to qualify for ABSTUDY Tertiary Award or Master and Doctorate Award, or the ABSTUDY Pensioner Education Supplement.
There are two categories of students eligible for a Supplement loan. The categories are described in Policy Manual sections 7.16.5.2 and 7.16.5.3.
Category 1 students are tertiary students who are eligible for ABSTUDY PES, or Living Allowance under ABSTUDY Tertiary Award or Masters and Doctorate Award.
A Category 1 student must trade in (or give up) $1 of PES or Living Allowance for every $2 of repayable Financial Supplement loan. For example, a student receiving $5,000 Living Allowance could trade in $3,000 of Living Allowance for a Supplement loan of $6,000. The total amount they would receive is $8,000. The Supplement loan of $6,000 is repayable.
Trading in means that the PES or Living Allowance is reduced by one half of the amount of Supplement loan paid.
Category 1 students cannot trade in allowances other than Living Allowance or PES.
The minimum amount of Category 1 Supplement loan payable in a calendar year is $500, which requires a trade in of $250. The maximum payable is $7,000, which requires a trade in of $3,500.
The reduction in PES or Living Allowance which results from trading in does not affect a student’s entitlement to other allowances such as Fares Allowance or Incidentals Allowance.
Category 2 students are dependent tertiary students who are ineligible for Living Allowance but who:
From 1 January 2000 dependent tertiary students who are not eligible for ABSTUDY Living Allowance because of the level of their family assets may be eligible for a Category 2 loan. A loan is available if the family assets, after disregarding 75% of any business and/or farm assets, are below the normal family assets test threshold. The Category 2 income test must also be satisfied.
The minimum amount of Category 2 Supplement loan payable in a calendar year is $500, and the maximum payable is $2,000.
There is no trade in for a Category 2 Supplement loan.
A potential Category 2 student needs to lodge an initial claim for ABSTUDY, and have the claim fully assessed to determine whether there are reasons, other than the parental means tests, which would make the student ineligible for ABSTUDY.
An ABSTUDY student cannot be assessed under the parental means tests as a fall back position.
The adjusted parental income is the same as that defined for ABSTUDY Living Allowance purposes.
If the current income concession is applied when calculating a student’s entitlement to ABSTUDY, the current income is also used to determine that student’s Supplement loan entitlement.
This means that, when determining whether the adjusted parental income is less than the Category 2 income threshold, current year income figures apply from the date the concession applies.
Reverse current income assessment may also affect Supplement loan entitlement (see Policy Manual 6.3.2).
The table below shows the effect on the Category 2 income threshold of up to five dependent children and dependent students.
|
Number of Dependent Children (Dependent Adjustment)1 |
|||||||
|
0 |
1 |
2 |
3 |
4 |
5 |
||
|
Number of Dependent Students (Higher Dependent Deduction)2 |
0 |
$55,950 |
$57,150 |
$59,650 |
$62,150 |
$64,650 |
$67,150 |
|
1 |
$59,650 |
$60,850 |
$63,350 |
$65,850 |
$68,350 |
$70,850 |
|
|
2 |
$63,350 |
$64,550 |
$67,050 |
$69,950 |
$72,050 |
$74,550 |
|
|
3 |
$67,050 |
$68,250 |
$70,750 |
$73,250 |
$75,750 |
$78,250 |
|
|
4 |
$70,750 |
$71,950 |
$74,450 |
$76,950 |
$79,450 |
$81,950 |
|
|
5 |
$74,450 |
$75,650 |
$78,150 |
$80,650 |
$83,150 |
$85,650 |
|
Dependent child adjustments do not include the applicant student.
1 Adjustment for first dependent child who is under 16 and not
receiving ABSTUDY or AIC = $1,200
Deduction for each other dependent child who is under 16 and not receiving
ABSTUDY or AIC = $2,500
2 Adjustment for each other dependent full-time student aged 16 to 24 (or who is under 16 and receiving ABSTUDY or AIC) = $3,700
Do not include the student or children who are independent or in State care under ABSTUDY or YA/Austudy, or who are receiving a FaCS benefit in their own right; eg Newstart Allowance.
Introduction
This topic explains how the ABSTUDY Student Financial Supplement loan works.
Students who have deductions made from their PES or Living Allowance for recovery of a debt can trade in only the amount that they receive after the adjustment for the debt has been made.
Amounts withheld, or to be withheld within the Supplement loan eligibility period, cannot be traded in for Supplement loan.
A student may be granted a lump sum Advance Payment of their future ABSTUDY entitlement. Any amount of Advance Payment which has not yet been recovered, but where recovery during the Supplement loan eligibility period is anticipated, is not available to trade.
The amount of Supplement loan to be offered to a student is determined by:
Supplement loan offer amounts are made in whole dollars. An offer calculated as an amount comprised of dollars and cents is rounded up to the nearest dollar.
The Supplement loan Eligibility Period within a calendar year is determined as follows:
The loan entitlement start date is the latter of :
The loan entitlement end date is the earlier of :
The loan entitlement end date for a particular calendar year cannot be earlier than the loan entitlement start date.
Category 1 offers are dependent on the amount of tradeable benefit, and the number of days in the student loan eligibility period.
Category 1 offers are calculated using the following formulae :
| [Total PES/Living
Allowance-Advance Payment recoveries – Debt withholdings*] x 2
* All within the FSL eligibility period |
||
|
OR |
||
| $7,000
|
X |
Number of eligible Cat 1 days |
| Number of days in the calendar year | ||
The maximum Supplement offer is the lesser of the two amounts.
For all Category 1 customers, including those who are undertaking study in short courses (30 weeks or less), the following Supplement loan offers are calculated :
Category 2 offers are dependent on the number of days in the student’s Supplement loan eligibility period.
Category 2 offers are calculated using the following formula :
| $2,000
|
X |
Number of eligible Cat 2 days |
| Number of days in the year |
For Category 2 customers who are not undertaking study in short courses (30 weeks or less), the following Supplement loan offers are calculated :
Category 2 students who are undertaking a short course have 30 days from the later of the date of the assessment which produced the initial offer, and the short course start date to accept their maximum offer. This date is the Short Course Cut Off Date.
If a student has periods of both Category 1 and Category 2 eligibility within the same calendar year, the maximum Supplement loan offer is calculated for each of the eligibility periods individually. The student’s total maximum Supplement loan offer for the year is the sum of the offers for each Category.
The minimum Supplement loan offer that is available to mixed category customers is a total of $500.
From 1 January to 9 March 2002 Paul is ineligible for ABSTUDY because of his parent’s income. However he qualifies as a Category 2 student for this period (69 days).
As his parental income drops below the ABSTUDY parental income free area on 10 March, Paul becomes eligible from 10 March to 31 December 2002 for ABSTUDY Living Allowance of $2771.10. Therefore he is a Category 1 student for 297 calendar days.
His year 2002 Supplement loan offer is worked out as follows:
| Category 2 | = | $2,000
|
x | 69 | = | $378 |
| 366 |
PLUS THE LESSER OF
| Category 1 | = | $7,000
|
x | 297 | = | $5,680 |
| 366 |
OR
| Category 1 | = | 2 x $2,771.10 | = | $5,543 |
| Therefore: | $5,543 + $378 | = | $5,9211 |
Paul’s Supplement loan offer for 2002 is $5,921
This is referred to as a mixed offer.
This table shows the total amount of assistance a Category 1 student can receive for a range of levels of ABSTUDY Grant and Supplement
| Annual ABSTUDY Entitlement Before Trade in |
Fortnightly ABSTUDY payment before trade in |
Fortnightly Payments with Supplement Total fortnightly payment with Supplement after ABSTUDY trade in ($) |
|||||||
|
($) |
($) |
$500 |
$1,000 |
$2,000 |
$3,000 |
$4,000 |
$5,000 |
$6,000 |
$7,000 |
|
1,000 |
38 |
48 |
58 |
77 |
- |
- |
- |
- |
- |
|
2,000 |
77 |
86 |
96 |
115 |
134 |
153 |
- |
- |
- |
|
3,000 |
115 |
125 |
134 |
153 |
173 |
192 |
211 |
230 |
- |
|
4,000 |
153 |
163 |
173 |
192 |
211 |
230 |
249 |
268 |
288 |
|
5,000 |
192 |
201 |
211 |
230 |
249 |
268 |
288 |
307 |
326 |
|
6,000 |
230 |
240 |
249 |
268 |
288 |
307 |
326 |
345 |
364 |
|
7,000 |
268 |
278 |
288 |
307 |
326 |
345 |
364 |
384 |
403 |
The Supplement loan payability period is the actual period or periods in a year for which the loan is payable to a student.
The payability period is determined by the date the student lodges the ‘Student Financial Supplement Application and Agreement’ form with the CBA.
The Supplement payability period can be the same as or less than the Supplement eligibility period depending on the date of lodgement by the student.
This section applies to all Category 1 students and Category 2 students not undertaking a short course.
For students who lodge their Supplement loan applications with the CBA no later than 31 May, the Supplement loan payability period is the same as the Supplement loan eligibility period.
This section applies to all Category 1 students and Category 2 students not undertaking a short course.
For students who lodge their Supplement loan applications with the CBA after 31 May but no later than 30 September, the Supplement loan payability period is from the later of 1 July and the start of the Supplement loan eligibility period, to the end of the Supplement loan eligibility period.
Marcia is undertaking tertiary studies for the whole year. She becomes eligible for ABSTUDY Living Allowance on 1 May. Her Supplement loan eligibility period is therefore 1 May to 31 December, which is 245 days.
She will receiving Living Allowance payments of $45.80 per fortnight. She would normally be able to trade in Living Allowance of:
| $45.80
|
x | 245 | = | $801.50 |
| 14 |
for a maximum Supplement of: $801.50 x 2 = $1,603
However, Marcia does not lodge her Supplement loan application until 20 June. Her Supplement loan payability period is therefore 1 July to 31 December.
The maximum Living Allowance she can trade in for that period is:
| $45.80
|
x | 184 | = | $601.94 |
| 14 |
for a maximum Supplement of: $601.94 x 2 = $1,204
This section applies to all Category 1 students and Category 2 students not undertaking a short course.
For students who lodge their Supplement loan applications with the CBA after 30 September, the Supplement loan payability period is from the later of the date the Supplement application is lodged and the Supplement loan eligibility period start date, to the end of the Supplement loan eligibility period.
Adam is studying for the whole year (not a leap year). He is a Category 1 student whose Supplement loan eligibility period is 1 January to 31 December. He does not lodge his Supplement loan application with the CBA until 10 October. His Supplement loan payability period is therefore 10 October to 31 December, which is 83 days.
The maximum Supplement loan he can receive is:
| $7,000
|
x | 83 | = | $1,592 |
| 365 |
This section only applies to Category 2 students undertaking short courses.
For Category 2 students undertaking short courses (30 weeks or less) who lodge their Supplement loan applications with the CBA on or before the Short Course Cut Off Date, the Supplement loan payability period is the same as the Supplement loan eligibility period (generally the duration of the course).
This section only applies to Category 2 students undertaking short courses.
For Category 2 students undertaking short courses (30 weeks or less) who lodge their Supplement Applications with the CBA after the Short Course Cut Off Date, the Supplement loan payability period is from the date the Supplement loan application is lodged with the CBA to the end of the Supplement loan eligibility period.
Ellen is a Category 2 student undertaking study in a short course from 5 April to 14 August (in a leap year). Her Supplement loan eligibility period is therefore 5 April to 14 August, which is 132 days.
The maximum Supplement loan she can apply for is:
| $2,000
|
x | 132 | = | $722 |
| 366 |
The Supplement Entitlement Notice Ellen receives advises her that she can apply for that amount of Supplement loan if she lodges her application with the CBA on or before 4 May.
She does not lodge her Supplement loan application until 10 May. Her Supplement loan payability period is therefore 10 May to 14 August.
The maximum Supplement loan she can receive is:
| $2,000
|
x | 97 | = | $531 |
| 366 |
Students who lodge their Supplement loan applications for a particular calendar year after 31 December of that year will not be accepted for a Supplement loan for that year. This provision cannot be waived because of extenuating circumstances claimed by a student.
Apart from PES and Living Allowance, which can be traded in for a Supplement loan, a student may be entitled to receive other allowances which cannot be traded in. If a student’s PES or Living Allowance is reduced as a result of trading in, he or she continues to be eligible for the other allowances, such as Fares Allowance and Incidentals Allowances.
If a Category 1 student trades in all of his or her PES or Living Allowance for a Supplement loan so that he or she is actually receiving no Living Allowance or PES, the student still retains eligibility for other non-tradeable allowances, provided the other requirements for receiving these allowances are met.
A Supplement Entitlement Notice (SEN) is produced when a student’s Supplement loan offer amount for a calendar year is first calculated.
A new SEN is produced if reassessment of the student’s ABSTUDY causes a change in the Supplement loan offer of $100 or more since the last SEN was produced.
The SEN details the minimum and maximum loan amounts for which a student can apply, and indicates relevant cut-off dates for the lodgement of a Supplement loan application.
A booklet is sent to the student with a SEN at the time of the original ABSTUDY claim, however, if the booklet is lost, a student may contact Centrelink to request a copy of the booklet ‘Student Financial Supplement Scheme 2002 – A Guide for Applicants’, which sets out the terms and conditions of the loan. The booklet also contains a copy of the ‘Student Financial Supplement Application and Agreement’ form.
To apply for a Supplement loan, the student lodges a ‘Student Financial Supplement Application and Agreement’ form with the CBA. This can be done in person or by mail. When applying for a loan the student also needs to provide their Supplement Entitlement Notice (SEN) and proof of identification.
All Supplement loan contracts are subject to a 14 day cooling off period. The cooling off period allows students the opportunity to reconsider the decision to take out a Supplement loan. The cooling off period starts on the first day of the contract period, which is the day the Commonwealth Bank accepts the application.
Where a student wishes to cancel the contract during the fourteen day period, s/he needs to write to the CBA branch where the claim was lodged advising them of the decision to withdraw the application for a Supplement loan.
The cooling off period can be waived. When the student lodges the completed Application and Agreement form with the Commonwealth Bank s/he will be asked if they wish to waive the right to cancel the contract within the cooling off period. If the student decides to waive the cooling off period s/he will be asked to sign the waiver portion of the Application and Agreement form.
If the student wishes the cooling off period to be applied, the application will be processed after the expiry date of the cooling off period. The first payment of Supplement loan will usually be within one to three weeks of the expiry date of the cooling off period.
If the student waives the cooling off period, the application will be processed from the date of acceptance. The first payment of Supplement loan will usually be within one to three weeks of the date the application form is lodged with the CBA.
A student may cancel their Supplement loan contract at any time before the date of the first Supplement loan payment. To do this the student should complete a ‘Student Financial Supplement Request to Cease Payments’ form, which is available at Commonwealth Bank branches, or write to the CBA branch where they lodged their application.
If the request is not processed in time to prevent the first loan payment being made, the student must repay the amount to the CBA as a reversal. When the cancellation is processed by Centrelink the student’s PES or Living Allowance payments will be restored.
Supplement loan applications for a particular year lodged after 31 December of that year will not be accepted. This provision cannot be waived because of extenuating circumstances claimed by the student. Where 31 December falls on a weekend the last date for the lodgement of applications is the next business day.
The CBA opens a loan account for the student when the application form is accepted. This is a special account required by the CBA to record Supplement loan transactions. It is not the credit account nominated by the student into which Supplement loan payments are credited. The student’s credit account can be with any bank, building society or credit union.
Note: Students should quote their loan account number when dealing with the CBA.
If the student does not already have an account with the CBA, he or she is required to provide proof of identification, along with the Application and Agreement form, for the loan account to be opened. This is known as the ‘100 point check’ and consists of identity documents, given point ratings, which need to total 100 points.
This table shows the documents which satisfy the requirements for the 100 point check and their respective point values.
|
Identification |
Point value |
|
Supplement Entitlement Notice (SEN) |
25 |
|
70 |
|
Existing customer of CBA who has previously achieved 100 points with the bank. |
100 |
Note: The above ID must contain either a signature or a photo of the customer. |
40 |
|
Letter from Employer (within last two years) confirming name and address. |
35 |
|
Credit/Debit Cards, Passbooks - other than CBA (one allowed per institution). |
25 |
|
Medicare Card. |
25 |
|
Isolated Area Aboriginal student: written reference signed by two acceptable referees. |
100 |
|
100 |
|
40
|
Photocopies of documents are not acceptable. A certified copy or extract of a birth certificate or certified copy of a citizenship certificate is acceptable provided the copy is certified by the original issuing authority.
If documents are mailed to the bank, originals must be sent.
The options for students to satisfy the ‘100 point check’ are either:
If the customer requires further details about documents and requirements for the 100 point check they should be referred to a branch of the Commonwealth Bank.
Where a student lodges his or her Supplement loan application after a cut-off date, a concession can be applied which allows the payment of Supplement loan to be back dated if the late lodgement was due to circumstances beyond the student's control.
As a guide, similar circumstances which currently allow a concession to be applied to ABSTUDY payments would also be applicable to the late lodgement of Supplement loan claims.
A concession cannot be applied if the claim is lodged after 31 December.
The date of receipt of each Supplement loan application is provided to Centrelink by the CBA. This is the actual date the claim is received at the bank. The CBA has been requested to retain the envelopes for posted claim in case students wish to apply for a late lodgement concession. In such situations, authorised officers should determine the date of receipt in the same way this date is currently determined for ABSTUDY claims, eg. in some cases, authorised officers accept the post mark date as the date of lodgement.
The authority within Centrelink to apply the concession for late lodgement of Supplement loan applications lies with the same officers who are authorised to apply the concession for late lodgement of ABSTUDY claims.
The amount of Supplement loan accepted by the student is advised to Centrelink by the CBA.
The student’s loan offer is recalculated to ensure that the student is still entitled to the amount they accepted.
If the loan amount accepted by the student is higher than their current offer, ISS will limit the acceptance amount to the maximum offer amount. The amount of loan actually payable to the student is known as the system acceptance amount.
The student’s fortnightly Supplement loan payments are determined, based on the system acceptance amount.
The amount of PES or Living Allowance to be traded in by Category 1 customers is determined.
Any amount of PES or Living Allowance already paid to the student which should form part of the trade in amount is determined. This amount, the trade back, becomes part of the student’s Financial Supplement debt.
Each fortnight details of the Supplement loan payments to be paid to students, as calculated by ISIS, are provided to the CBA by Centrelink.
The CBA makes Supplement loan payments to the students’ credit accounts as advised by Centrelink.
The student can nominate the credit account to which they wish instalments of Supplement loan paid. The account does not have to be the same one that the student’s PES or Living Allowance payments are directed to.
Supplement loan payments cannot be made by cheque.
If the student is normally a cheque payee, he or she is required to nominate an account into which Supplement loan payments are to be made. The account does not have to be with the CBA.
The Supplement loan is not taxable.
Group Certificates are produced at the end of each financial year for all recipients of ABSTUDY payments during that financial year. The Group Certificate contains only the payment and taxation totals for taxable allowances. It does not contain details of any Supplement loan amount paid to the student.
Any Living Allowance amounts which were paid to the student but later traded in (trade back amounts) for a Supplement loan are not included on the Group Certificate. Trade back amounts are treated as Supplement loan and are therefore not taxable.
The amount of Supplement loan which a student is entitled to receive is recalculated whenever the student’s ABSTUDY is reassessed. A change in the level of a student’s PES or Living Allowance can result in a change to the Supplement loan entitlement.
If the maximum possible Supplement loan amount changes, the resultant action (described below) will depend upon whether or not the student has already accepted a Supplement loan.
If Supplement loan payments have not commenced and reassessment reduces the student’s maximum Supplement loan offer by $100 or more since the last SEN was issued, the student is sent a new SEN advising them that the maximum Supplement loan amount for which he or she can apply has decreased.
If Supplement loan payments have commenced and reassessment reduces the student’s maximum Supplement loan amount, then:
If reassessment increases the student’s maximum Supplement loan offer by $100 or more since the last SEN was issued, then:
If Supplement loan payments have not commenced and reassessment makes the student ineligible for a Supplement loan, then the student is informed that he or she is no longer entitled to apply for a Supplement loan.
If Supplement loan payments have commenced and reassessment makes the student ineligible for the Supplement loan because the student’s PES or Living Allowance ceases, or the student ceases to qualify as a Category 2 student:
A student who is receiving Supplement loan payments may at any time request the CBA to stop further payments. The student must advise the CBA in writing. The CBA advises Centrelink that Supplement loan payments are to stop and the date from which the change was requested.
Centrelink must stop the student’s Supplement loan payments within 4 weeks of the date of the written request and the PES or Living Allowance, if any, is restored. Any Supplement loan payments made after that time are the responsibility of the CBA and may be recovered from the student by the Bank. Any PES or Living Allowance traded in for those payments will be reimbursed to the student.
Any traded in PES or Living Allowance already paid out as Supplement loan cannot be reimbursed to the student. The Supplement loan amount which the student has received for the year must still be repaid under the normal repayment conditions (see Chapter 5).
The only exceptions are where:
A student who is not receiving the maximum Supplement loan amount to which he or she is entitled may at any time request the CBA to increase the accepted Supplement loan amount.
The CBA advises Centrelink of the new Supplement loan amount and the date of the change. The student’s loan offer is recalculated by ISS to ensure that the student is still entitled to the new acceptance amount. New fortnightly Supplement loan payment amounts and, if applicable trade in amounts, are calculated.
A student who is receiving Supplement loan payments may at any time request the CBA to decrease the Supplement loan amount. However, the student cannot decrease their Financial Supplement loan amount to less than they have already received.
The CBA advises Centrelink of the new Supplement loan amount and the date from which the change was requested.
New fortnightly Supplement loan payment amounts and, if applicable trade in amounts, are calculated.
If the student has already been paid more than the requested amount, then the Supplement loan payments will cease.
An overpayment of Supplement loan can occur for the same reasons as a PES or Living Allowance overpayment. Examples include:
Except for cases requiring recovery action, overpaid amounts of Supplement loan are repaid in accordance with the arrangements and conditions for repaying the Supplement loan (see 7.15.7).
This includes cases where administrative error is established as the cause of the overpayment.
Overpayments of Supplement loan should be looked at to determine whether:
These are the same criteria which should be used in cases where PES or Living Allowance has been overpaid.
In these cases, Centrelink may ‘buy back’ from the CBA the amount of Supplement loan overpaid. The debt becomes a debt to the Commonwealth. The recovery of Supplement loan overpayments is a Centrelink procedure.
If an overpayment of Supplement loan occurs because a student dies, Centrelink may buy back the amount of any outstanding Financial Supplement debt owed by the student to the CBA. The debt will only be bought back where a death certificate or other acceptable form of proof of death has been sighted*. Once the debt has been bought back by Centrelink, or if the debt is already with Centrelink, it is discharged. The debt will not be passed on to the deceased person’s estate or next of kin. The only exception is where the debt has been passed to the ATO and a Tax Assessment Notice has been issued which includes an amount owing in respect of the Financial Supplement debt.
Acceptable forms of proof are:
Further details concerning the administration of Supplement loan overpayments can be obtained from the Centrelink Supplement team.
ABSTUDY students can appeal against decisions made by an officer under the Student Assistance Act 1973 (the Act) concerning Supplement eligibility and amounts.
In relation to the Supplement loan, the word "officer" has the same meaning as it does in relation to ABSTUDY.
The consideration and appeal process for ABSTUDY should also be followed in relation to ABSTUDY Supplement loan decisions.
Although most decisions regarding Supplement loan entitlement are automatically calculated by ISS, these decisions are considered to have been made by an officer under the Act, just as calculations of ABSTUDY made by ISS are considered to be decisions made by an officer under the Act. Students can appeal against the following types of decisions in relation to the Supplement loan :
Introduction
This topic explains Financial Supplement debt.
The student may take out a new Supplement loan contract with the CBA each year. If the student receives Supplement loan for, say, three years, he or she has three separate Supplement contracts.
The contract period is the period beginning on the date on which the Supplement application is accepted by the CBA and ending on 31 May in the fifth year after the year for which the Supplement is paid.
For example, if a student’s Supplement application is accepted on 10 March 2002, the contract period for the 2002 Supplement loan begins on 10 March 2002 and ends on 31 May 2007.
The student can voluntarily repay his or her Financial Supplement debt at any time after he or she begins receiving Supplement loan payments. However, the student does not have to commence repaying the Financial Supplement debt until after the end of the contract period.
Voluntary repayments made before the end of the contract period are made by the student to any branch of the CBA and receive a discount.
Supplement repayments made after the end of the contract period:
The diagram below shows the contract period for a Supplement loan paid in 2001 and the repayment arrangements which apply.
| Student's Year of Supplement | |||||||
|
2001 |
2002 |
2003 |
2004 |
2005 |
2006 |
||
|
Student’s SUPPLEMENT payments commence – start of Agreement Period |
Student
can make repayments to CBA at any time during this period
|
End of Agreement period 28 May. Student owes debt to Commonwealth and is required to repay through the tax system. |
|||||
| 2001 SUPPLEMENT Agreement period (Agreement is with CBA) | |||||||
On 1 June of each year (commencing in the calendar year following the year for which the Supplement is paid), the amount of Financial Supplement debt outstanding increases according to the following calculation:
|
Total Financial Supplement amount paid LESS Repayments and discount on repayments credited to student |
X |
Indexation Factor* |
* The indexation factor is based on movements in the Consumer Price Index (CPI).
Note: During the contract period, the Supplement loan principal amount is owed to the CBA. The outstanding principal amount is indexed at 1 June every year commencing in the year following the year for which the Supplement is paid. The indexation amounts are added to the principal amount outstanding and are owed to the Commonwealth by the student.
In June each year Centrelink will provide the student with a statement showing details of each Supplement contract in previous years. The statement will include:
The student receives a separate statement for each Supplement loan debt.
The CBA will also provide the student with a statement in January each year. This statement shows all transactions relating to the student’s CBA loan account, but does not show the discount accorded to early repayments or CPI adjustments. Students can request a statement from the CBA at any time.
The Centrelink statement shows the total balance of the student’s Financial Supplement debt as it includes CPI adjustments and discount amounts, where appropriate.
A student can make repayments of Supplement loan before the end of the contract period. These repayments are voluntary and are made directly to any branch of the CBA. Repayments cannot be accepted by Centrelink.
Any voluntary repayments of Supplement loan made within the contract period are given an increased value (a discount). The formulae for determining the amount of the discount are:
For repayments less than the amount outstanding :
| Discount | = | [ | amount repaid x 100
|
] | - | amount repaid |
| 85 |
For repayments equal to the amount outstanding :
| Discount | = | [ | amount repaid x 115
|
] | - | amount repaid |
| 100 |
The discount amount is always rounded to the nearest dollar (eg $233.40 becomes $233.00, and $233.50 becomes $234.00).
If a student wishes to clear their Financial Supplement debt within the contract period they only need repay 85% of the total amount outstanding.
Colin wants to repay his debt of $1,000. He only has to pay $850. The other $150 is the discount.
If the student had a Supplement loan in more than one year, the student can choose which year’s Supplement debt a repayment is to be credited against by quoting the relevant loan account number to the CBA.
Centrelink (National Support Office) pays the CBA the interest on the Supplement loan on behalf of the student. Interest is charged by the bank on the outstanding principal only, not on any increases due to CPI.
Financial Supplement Loan contracts expire on 31 May of the fifth year after the year for which the loan was paid. After this date Centrelink, on behalf of the Commonwealth, 'buys back' the balance of the loan from the CBA.
After the expiry of the loan contract the student no longer has an obligation to the CBA and no loan repayments can be accepted by the CBA.
Following the end of the contract buy back management of Financial Supplement loans transfers to the Australian Taxation Office (ATO). Centrelink provides ATO with the loan balance at the end o the contract period, which takes account of:
Financial Supplement loan balances are taken into account in subsequent tax assessments for the loan recipients. The ATO commences recovery of Financial Supplement loans once taxable income reaches the level of average earnings. Compulsory repayments are calculated by taking into account the level of taxable income and the repayment rate for that level. The calculated repayment amount is shown as the Financial Supplement assessment debt on the income tax Notice of Assessment.
Voluntary repayments may be made to the ATO at any time following after the loan details have been transferred to the ATO. Unlike voluntary repayments made during the loan contract period, these repayments do not attract the repayment discount.
Financial Supplement loans are managed by the ATO until the loan is fully recovered or the death of the loan recipient.
Note: Some Financial Supplement Loans are subject to early buy back because of the death of the recipient, fraud or the failure to notify a change of circumstances (refer 7.16.6.11). These loans are bought back at the time the early buy back decision is made and details of the loans are NOT transferred to the ATO. Where the loan is to be recovered eg. where there is fraud or failure to notify a change of circumstances, a debt is raised by Centrelink and recovery action is taken through Centrelink debt recovery practices.
At the end of the contract period the amount to be paid by the Commonwealth to the CBA is calculated and arrangements are made for payment to be made to the bank. The Australian Taxation Office is advised of the Financial Supplement debt amount, in order that recovery of the debt can be pursued through the taxation system.
Centrelink advises the student in writing:
A student can make voluntary repayments towards their Financial Supplement debt after the end of the contract period. These payments are made directly to the ATO.
Commencing with the tax return for the financial year in which the Supplement loan contract period ends, the person begins repaying the Financial Supplement debt through the taxation system if his or her taxable income is above a specified level.
If the person is required to make repayment for a financial year, the assessment of the amount repayable is included in the ATO's tax notice of assessment issued to the person for that financial year.
The amount which a person is required to repay for a financial year depends upon the level of his or her taxable income. The repayment rates for the 1999-2000 financial year are set out in the following table
|
Taxable Income Range for the financial year ($) |
Percentage of income to be repaid |
|
Below $31,127 |
Nil |
|
$31,127 to $35,372 |
2% |
|
$35,373 to $49,523 |
3% |
|
$49,524 and above |
4% |
The taxable income levels in the table above will be indexed each year on the basis of movements in average earnings.
This table shows the annual repayment amount based on the repayment rates set out in the table at 7.16.8.6.2.
|
Taxable Earnings ($) |
Annual Repayment ($) |
|
26,000 |
NIL |
|
28,000 |
NIL |
|
30,000 |
NIL |
|
32,000 |
640 |
|
34,000 |
680 |
|
36,000 |
1,080 |
|
38,000 |
1,140 |
|
40,000 |
1,200 |
|
42,000 |
1,260 |
|
44,000 |
1,320 |
|
46,000 |
1,380 |
|
48,000 |
1,440 |
|
50,000 |
2,000 |
|
52,000 |
2,080 |
|
54,000 |
2,160 |
|
56,000 |
2,240 |
Calculations example:
| Column 1: | $56,000 x 4% | = | $2,240 |
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