Reforming Youth Allowance

This weekend the Fairfax broadsheets have been pushing student welfare issues. The SMH focuses on the issue of accommodation:

HUNDREDS of university students are living in conditions so poor they are technically homeless, although they remain hidden in statistics on youth homelessness.

Though the reason they are not appearing in the homelessness statistics is that ‘technically’ there are not homeless at all, but instead lack a permanent home. It doesn’t make for quite as good a media beat-up, but a problem nonetheless.

The Age looks at some possible solutions to the issue of student income, including paying students the same as the unemployed, and HECS-like loan.

Having spent some time this week examining these issues, I agree entirely that the student income support system is a shambles. In fact, it is a far bigger mess than the media is reporting. There are at least five different programs supporting students: Youth Allowance, Austudy, Abstudy, FTB A and Commonwealth scholarships.

Youth Allowance and FTB A both provide welfare for families with full-time students aged 24 or under, with the student getting the entitlement under YA and the parents under FTB A. The same household cannot claim both. Though eligibility for YA stops at much lower household income than FTB A, for families earning $50-60,000 a year the student would be better off forfeiting his or her YA, and getting FTB A cash from his/her parents instead. This would also let them take advantage of the FTB A child earning threshold being much more generous than the YA personal income test, where effective marginal tax rates of at least 50% start at $118 a week.
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