A special federal government committee is expected to investigate claims that wealthy Asian students are abusing Australia's support and fee systems and costing the Australian taxpayer millions of dollars a year.

Ross Free, the education minster responsible for the student benefit scheme, Austudy, has set up a national reference group to look at ways of making the scheme simpler. The committee will also be asked consider a study by two Monash University researchers that indicates the system is being abused.

In a report by Monash sociologist Bob Birrell and statistician Ian Dobson, university students from Hong Kong and Malaysia were said to be apparently milking Austudy, and avoiding payments under Australia's ³ÉÈËVRÊÓƵ Contribution Scheme which obliges students to meet a proportion of the costs of their course.

Many Asian students gain admittance to Australia as permanent residents, enrol in university and accept Austudy benefits. They then defer upfront payment of the HECS charge of Aus$2,500 (Pounds 1,250) a year and, after completing their degrees, they return home -- not only avoiding paying any fees but having received income from the Australian taxpayer as well.

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The federal government spends about Aus$1.5 billion on Austudy benefits each year that go to 170,000 students, mainly in universities. More than Aus$15 million a year is estimated to go to 4,000 students from Hong Kong and Malaysia -- half the number from those two countries now at university in Australia.

The students also end up owing more than Aus$40 million under the HECS system when they complete three to four years study here. A member of the national reference group, Vince Callaghan, said any system of student benefits that was linked to the taxation system was open to abuse. "If you can rort the tax system, you can rort Austudy," he said.

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Mr Callaghan, a student counsellor at Deakin University in Victoria, heads a writing team that each year prepares a student guide to Austudy on behalf of the federal Education Department and the National Union of Students. He had suggested the national reference group be established to work with the department and try to simplify the Austudy scheme to make it "not just budget-driven".

The study also found that wealthy Australian parents with children attending expensive private schools may be using tax loopholes so their offspring obtain Austudy. Almost one in eight senior students at the most costly private schools receive Austudy.

"Austudy is a very good system -- more than half of all tertiary students get some financial aid -- but because of budget changes each year it is very complicated," Mr Callaghan said.