The federal government should collect unpaid debts from students after they die, a report by an influential panel has found.
The Grattan Institute study showed the government could collect about $800 million a year by 2017 if it recovered student debts from deceased estates and those living overseas.
The report considered a range of options for recovering "doubtful debt" – government money loaned to university students that is unlikely to be repaid. "The amount exceeds a billion dollars a year, and is expected to grow significantly in coming years," it said.
The report cites predictions that $7.1 billion of the $30.1 billion outstanding Higher Education Loan Program debt at June 30 last year will not be repaid.
The doubtful debt could reach $13 billion by 2017, the report said.
The report suggests its recommended changes apply to future students.
Students only begin repaying their higher education debt once their income passes a minimum threshold.
The government writes off HELP debts for students when they die.
The report recommends the government reclaim student debts from deceased estates worth more than $100,000.
But Grattan Institute Higher Education program director Andrew Norton said deceased estates would generate little income in the short term.
"This way will bring in very little actual cash in the near future but it will have a big accounting effect on the budget," he said.
The report also suggests a minimum annual repayment for Australians travelling or working overseas who are currently exempt from repaying their loans.
It also recommends tying payment increases to the consumer price index.
