What you need to know about federal student loan loans article The Federal Government has confirmed that it has closed its loan for students after the $7.8 billion loan was deemed a “disaster” by the Federal Government’s own watchdog.
The decision came after the Education Minister, Christopher Pyne, said the government had received reports of “serious financial distress” at the federal-student loan servicing agency.
The Department of Education said the closure was made due to “significant increases in demand” from graduates in the US and elsewhere.
It was announced last month the government would be winding down the loan from June 2020.
The Federal Treasury Department announced in June it would be ending the servicing of federal student debt from 2020-2022, but would continue to support borrowers until 2020-21.
The closure of the loan was confirmed in a statement issued on Friday.
“The Department of Finance has confirmed it has concluded that it is necessary to discontinue the loan servicing of the Commonwealth’s student loans as of June 2020,” the statement read.
Federal Treasurer Scott Morrison said the decision to shut down the servicing agency was a “huge disappointment”. “
As of June 2021, the Government will not continue to finance the servicing costs of the Federal Student Loan Guarantee, and will not repay the interest it accrued on the outstanding debt of the federal student lender.”
Federal Treasurer Scott Morrison said the decision to shut down the servicing agency was a “huge disappointment”.
“The Government has always taken the position that it will not finance the repayment of any federal student indebtedness, including the Federal Stafford Loan,” he said.
In the statement the Education Department said it was working with the Financial Review to “reinstate the servicing contract for federal student borrowers”. “
At the same time, we have a plan in place to support the Australian workforce as well as Australians across the country who need help with the financial stress they have experienced through the Great Lakes disaster.”
In the statement the Education Department said it was working with the Financial Review to “reinstate the servicing contract for federal student borrowers”.
“In the short-term, the Federal Treasury will continue the payment of interest on the Federal Students Loan Guarantor debt from the end of June to June 2021,” the department said.
But it added it would seek to re-establish the servicing services “in the future” in line with the new Government’s “transition” policy.
“That said, we will work closely with the Treasurer and other Government departments to ensure that the new government is prepared to undertake this re-instatement of the servicing contracts,” the Department said.
It said the Treasury would “continue to make decisions on the servicing status of federal students”.