Scholarships Exempt from Social Security Income Tests

All scholarships that pay tuition fees on a student’s behalf, or waive all, or part of, a student’s tuition fee, will no longer be included as income under the Social Security or Veterans’ Affairs income tests.

“We must ensure that that all Australians have access to quality education, regardless of their personal circumstances or financial background,” said Dr Nelson.

“It is important that students in financial need are not discouraged from accepting assistance with tuition fees,” said Senator Patterson.

The Ministers said the Government will ensure that students who receive a scholarship that pays or waives all, or part of, their tuition fees will now not have their Social Security or Department of Veterans’ Affairs payments affected.

As part of the reforms to higher education passed last year, full fee exemption scholarships no longer count as income under social security income tests. Today’s announcement builds on last year’s commitment by exempting all scholarships that partly or fully waive or pay tuition fees from social security income tests.

This measure will apply to scholarship recipients in any eligible secondary school, vocational education and training institution or higher education institution.

Next year, about 1,550 students will benefit from this initiative. By 2008, around 2,200 students will be benefiting from this measure each year.

“The new arrangements will mean a significant increase in income support for students whose payments are currently affected because they are also in receipt of a tuition scholarship,” said Senator Patterson.

“In addition, a student whose scholarship income would have exceeded the maximum allowable income under the income tests may now be eligible for income support.”

Schools and other educational institutions provide such scholarships to students who face significant financial disadvantages. Often these are exceptional students who would not have the opportunity to enter the school or the course of their choice without some assistance.

“The Government wants to encourage this support for students. This initiative will ensure that Australian education providers, businesses and community organisations are able to invest in students through tuition scholarships and be sure that these students will receive the full benefit of that support,” said Dr Nelson.

To be exempt from income tests, scholarships must be for tuition fees, either as a full or part waiver offered by an education institution, or as a full or part payment directly to the institution for those fees. The exemption will only apply to that part of the scholarship which is for tuition fees and will only cover the value of fees that would normally be charged for the course in which the student is enrolled.

The new Commonwealth Learning Scholarships announced in the Government’s higher education reform package, Our Universities: Backing Australia’s Future, are also exempt from the income test for income support purposes. More than $327 million will be provided to fund nearly 40,000 scholarships over the next five years to provide financial assistance to students from low socio-economic status backgrounds.

Scholarships for other education expenses, or cash paid directly to students or their parents, will continue to be included as income for social security purposes.

For further information on this initiative, or on the social security treatment of other scholarships, students should contact Centrelink.