Degrees Of Debt

The Age

Wednesday October 22, 2003

TRACEY KIFT

While students may get a wealth of knowledge from their days at university, most are walking away with substantial debts, too.

More than 1.1 million people have a Higher Education Contribution Scheme (HECS) debt and, according to the National Centre for Social and Economic Modelling (NATSEM) at the University of Canberra, they'll have it for some time. Some will even take it to the grave!

NATSEM figures show the average age former students pay off their HECS debt is 39.3 years for females and 33.8 for males.

At age 35, almost 80 per cent of females and 38 per cent of males still have a HECS debt.

Overall, about $9 billion is owed in HECS fees and the amount is predicted to rise to $11.5 billion by the 2005-6 financial year.

Estimates suggest most students graduate with a HECS debt of between $11,000 and $30,000.

Depending on the size of the debt students accrue and the amount of money they earn during and after their degree, paying off the HECS debt can be a long-term prospect that may put off other big-ticket purchases such as buying a home.

The amount of HECS fees students pay varies depending on the course in which they are enrolled. Students enrolled full-time in arts courses, nursing, social science, humanities and education pay about $3768 a year; maths, computing, agriculture, engineering, science, economics and architecture run at $5367 a year; and the big-ticket courses of law, medicine, dentistry and veterinary science cost $6283 a year.

This means a primary teacher leaves university owing more than $15,000, a meteorologist or physicist will accrue more than $16,000 for their Bachelor of Science, and after six years in tertiary education, a doctor graduates with a debt of more than $37,000.

But while some students struggle to pay off their HECS debt, others have given up the fight.

Education Department figures show that about $1.5 billion in HECS debts is unlikely to ever be repaid to the Federal Government.

About $31.2 million is owed by Australians living overseas, $3.3 million was written off last financial year when debtors died and just under 20 per cent of all HECS debtors - whose income remains below the repayment threshold - are yet to start repaying their debt.

Top three-year fixed home loans **
Banks
Lender          True rate AAPR*         Lender rate     Total upfront fees
Ongoing fees
Maxis Loans     6.34%           6.59%           Nil             Nil
HSBC            6.44%           6.29%           $681.36                 Nil
ING Bank                6.47%           6.39%           Nil             Nil
Macquarie Bank  6.48%           6.85%           $350            Nil
ANZ Bank        6.55%           6.40%           $600            Nil
Non-banks
Lender                  True rate AAPR*         Lender rate     Total upfront
fees    Ongoing fees
FCCS Credit Union               6.27%           6.67%           $1250
$5/month
RAMS                    6.33%           6.75%           $1065           $8/month
Pacific Mortgage Corporation    6.34%           6.54%           $300
Nil
Heritage Building Society       6.38%           6.35%           $600
$5/month
Collins Securities              6.41%           6.30%           $600
Nil
* AAPR is the annualised percentage - the rate after extra fees and charges are
taken into account.
** Rates are for loans $200,000 over 25 years in Victoria for owner-occupied
homes.
WARNING: This comparison rate applies only to the example or examples given.
Different amounts and terms will result in different comparison rates. Costs
such as redraw fees or early repayment fees, and costs savings such as fee
waivers, are not included in the comparison rate but may influence the cost of
the loan.
Compiled by www.interestrate.com.au using Cannex data (October 15).

© 2003 The Age

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