Students in Australia have a wide range of options when it comes to financing their MBA. While nearly every bank offers a student loan of some sort, the Australian government provides the best interest free loans with flexible repayment options.
Government Loans
FEE-HELP
FEE-HELP (Higher Education Loan Program) is an Australian Government scheme that helps students finance their education. Only tuition fees are covered under this scheme and there is no conventional interest as such. Accommodation, travel and study material are not covered.
Eligibility
1. The university should be an approved FEE-HELP provider
2. Australian citizen or permanent humanitarian visa holder or permanent resident or a permanent visa holder
3. Meet the tax file number (TFN) requirements. If TFN is not available, a Certificate of application for a TFN in necessary
FEE-HELP loan limits: $93,204
• This limit is a lifetime limit. It cannot be altered by any repayments made
• Previous study or other debts does not affect the limit
To apply
1. Request for FEE-HELP assistance form from the university
2. Form must be submitted to the university before the census date or administrative date, information for which will be available at the university
Interest Rates
• No interest rates are charged
• The accumulated debt will be indexed every year on 1st June to adjust its value for inflation. The 2012 indexation rate is 2.9%
• Debts are not indexed until they are 11 months old
Repayment
• Repayment is done through the tax system
• The repayment period starts once the repayment income rises above the compulsory repayment threshold, which is adjusted every year
• For 2012-13, the compulsory repayment threshold is adjusted as $49,095
• The repayment income is calculated from the income tax return, based on
a) Taxable income
b) Reportable fringe benefits
c) Net investment loss (This includes net rental loss)
d) Reportable super contributions
e) Exempted foreign employment income
f) The repayments amount is a percentage of the repayment income
g) This will range from 4% to 8% depending on the income
h) For a voluntary repayment of $500 or more, the account will be credited with an additional 5% of the amount paid voluntarily
Deferred repayment
Repayment can be deferred if under serious financial hardship or for other unavoidable reasons
Repayment write-off
• Only in case the program is not completed
• If the reason is serious illness or other special circumstances
• If withdrawal was after the census date because of change of mind, the debt will not be remitted
Private loans
Most Australian Banks offer personal loans. Many of them provide modified versions of these for students. Some of the common feature seen among these private loans is the lack of collateral, deferred payment and low fees. Here are the MBA loans offered by three of the leading banks in Australia:
Commonwealth Bank
The Commonwealth Bank is Australia’s leading financial services provider with $11.81 billion in assets. It supports education, aiming to develop financial literacy, and aids many educational programs.
Student Loan
• Loans from $5,000 to $50,000.00
• Repayment term, 1 - 7 Years
• No collateral required
• Two options, Variable rate @ 14.15% & Fixed rate @ 13.90%
• Service fee - $10 per month
• Late payment fee - $20
• Weekly, fortnightly, monthly repayment options
Overdraft Facility
• No establishment fees
• Interest rate – 13.60%
• Free until utilized
• Fees ranging from $5 - $15 per month
Westpac
Westpac was founded in 1817, making it Australia's oldest bank. It has $10.7 billion in assets and supports sustainability efforts and community organizations.
Choice Student Package
• Fixed rate option - $4,000 to $50,000 @ 13.89%
• Variable rate option - $4,000 to $75,000 @12.49%
• No collateral required
• Fees - $10 per month
• Repayment - 1 to 7 years
ANZ
ANZ is among Australia's largest banks and has more $1.4 billion in assets. Every year, millions of dollars are distributed to charitable organizations and community projects.
Graduate loan
• Minimum amount $5,000
• No maximum limit
• Variable interest rate of 14.29%
• No collateral required
• Approval fee - $150
• Other fees - $30 every three months
• Repayment - 1 to 7 years
Resources
1) FEE-HELP
2) Commonwealth Bank
3) Westpac
4) ANZ
5) Top 3 MBA in Australia
About the Author
I am Atul Jose, Founding Consultant of F1GMAT, an MBA admissions consultancy that has worked with applicants since 2009.
For the past 15 years I have edited the application files of admits to the M7 programs: Harvard Business School, Stanford Graduate School of Business, the Wharton School, MIT Sloan, Chicago Booth, Kellogg School of Management, and Columbia Business School, together with admits to Berkeley Haas, Yale School of Management, NYU Stern, Michigan Ross, Duke Fuqua, Darden, Tuck, IMD, London Business School, INSEAD, SDA Bocconi, IESE Business School, HEC Paris, McCombs, and Tepper, plus other programs inside the global top 30.
My work covers the full MBA application deliverable: career planning and profile evaluation, application essay editing, recommendation letter editing, mock interviews and interview preparation, scholarship and fellowship essay editing, and cover letter editing for funding applications. Full bio with credentials and admit history is here.
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