More than half of all new student loans taken out by students over the next five years will be used to consolidate, a new survey has found.
The data from the National Student Loan Consolidation Authority (NSLCA) showed that in the six months to June 2017, $2.8 billion was used to take out new student loan debt of $2,716 billion, a 2.3 per cent increase on the same period last year.NSLCAs survey also found that most students were satisfied with their new loan repayment options and the new loan consolidation service offered by the government.
The survey, which covered almost 4,500 borrowers, found that 70 per cent of respondents were satisfied about the consolidation service, with 76 per cent saying they were satisfied to the point of wanting to repay the loan.
The new loan consolidator offers a “loan-to-value” repayment option that is similar to a private student loan repayment plan (PSRP), but for new borrowers who do not have a loan to pay down.
The NSLCA said this new service offered a more direct, less expensive, and less risky way to consolidate loans, compared to private student loans.
“The new consolidation process is the first in a series of new refinancing options for many students, and it will provide them with a new and safer way to manage their debt, including an increased choice of repayment options for lower interest rates, and more predictable repayment terms,” the company said in a statement.NSLAs data shows that students were most likely to be satisfied with the consolidation option, with more than half (53 per cent) saying they would recommend the service to their friends and family.
Only 10 per cent said they would prefer not to consolidate at all, while a further 11 per cent indicated they were unsure.
But a significant number of students said they were not happy with the service.
More than a third (34 per cent), of the student respondents, said they did not think the service would be of benefit to them and would prefer to keep their existing loan balance.
Only 8 per cent were happy with consolidating their loan at all.
The results of the survey also revealed that students with debt over $25,000 were most often concerned about the service’s affordability.
Nearly half (47 per cent, or about one in three) of those students said their new loans would cost more than their current loans, while 23 per cent expressed that they would consider switching from a private loan to a government-backed student loan.
This is the latest in a number of recent surveys that have found that student debt is at its highest level since the Great Recession.
According to the latest figures from the Australian Bureau of Statistics (ABS), the average student debt for Australians stood at $29,100 in 2017, and a record $50,000 in 2018.
The figures also showed that students aged 18-24 were the most likely age group to be affected by the rise in student debt, with the proportion of people aged 18 to 24 who had student debt at least doubled since the survey was first conducted in the mid-1990s.
The latest survey also showed more than a quarter of Australian students were living with their parents.