A New Form Of Loan For Fee-paying Students

Sydney Morning Herald

Wednesday September 26, 2001

Aban Contractor.

Not everyone is singing the praises of interest-free finance for postgraduate students. But it does have some merit.

By Higher Education Writer Aban Contractor.

Late last month the Federal Education, Training and Youth Affairs Minister, Dr Kemp, announced with great fanfare the passage of the Government's Innovation and Education Legislation Amendment Bill (No 2) 2001.

It had passed without amendment, he boasted, and that meant about 30,000 more postgraduate student places had been created.

Why? Because part of that Bill included the legislation necessary to establish the Postgraduate Education Loans Scheme (PELS).

"PELS became a reality today [and] the new scheme will provide many Australians with the opportunity to undertake postgraduate course work study through an interest-free income-contingent loan," Dr Kemp said at the time.

The Government estimates there will be240,000 takers for these loans over the next five years.

Sound like a winner? Yes and no, says the president of the Council of Australian Postgraduate Associations, John Byron. At the time he described parts of the legislation as "dubious" and "flawed".

Representing the nation's 142,423 postgraduate students, Byron says the new scheme is not "all wine and roses". It will help some but not others.

"PELS addresses only the up-front component of full market-based fees," he says. "This will assist many shut out simply through lack of access to cash, but it will inevitably result in people getting into excessive debt.

"It will also result in increased fees in many instances as price-setters at institutions respond to increased demand and a perception of ready affordability. So, to those who take it up, it could be something of a poisoned chalice."

But the problems do not end there, Byron says. For many students there will be significant extra debt for courses which do not necessarily result in higher incomes.

And, for those who are "debt-adverse" - he includes women, those on low incomes and people with mortgages and/or children,- the scheme will provide little assistance.

Finally, Byron says, there is the question of justice.

"Postgraduate course work results in a significant public benefit through the development of the educated society that everyone agrees we need," he says.

"It also delivers a substantial dividend to employers through the skilling of the work force. To bill students and their families for this collective advantage is counterproductive and grossly unfair."

Byron's counterpart at the National Union of Students, David Henderson, agrees. He believes, like many in the university sector, that PELS is just the next step in the Federal Government's plan to deregulate fully higher education.

"The worst part about the PELS legislation is that it was passed unamended and so the controversial 'ministerial cap' on borrowings - a cap that has not been set, but will be at Kemp's discretion - will also cap Higher Education Contribution Scheme (HECS) debts.

"So, for the first time since HECS was introduced, there will be a limit on how much study a person can do under HECS."

And, the "the pitifully low repayment threshold", $23,242, would deter thousands, Henderson says. "It's a very sneaky way of gradually introducing full fees."

Kemp, naturally, says otherwise.

"This measure has been warmly welcomed by universities," he says. "And it will give them more incentive to design innovative courses and create study opportunities to respond to the ever-changing patterns of demand for higher education."

PELS Facts

* Available to fee-paying Australian students enrolled in postgraduate non-research courses.

* Eligible students able to borrow up to the limit of the tuition fee for each semester of their course.

* Universities set the tuition fees for the courses.

* No public subsidy for the cost of tuition.

* The loan does not cover living expenses.

* Students begin repaying the loan once their income reaches $23,242.

PELS application forms are available from universities. You will need your tax file number.

Source: DETYA

© 2001 Sydney Morning Herald

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