In The Jaws Of Debt

Sydney Morning Herald

Tuesday April 29, 2003

By Aban Contractor

Students and graduates together owe about $9 billion in deferred HECS fees, and some may still be in the red 30 years on.

As the Federal Government edges closer to the release of its eighth budget, many in the higher education sector are preparing for the worst.

Students and academics know that radical changes are in the offing, and large sums of public money to help reduce class sizes, boost research and help fund dwindling salaries are not likely to be among them.

And postgraduate students are expecting to be hit with a double whammy: scarcer resources to conduct the original research they must complete for master's degrees and PhDs, and fewer dollars to pay casual teaching staff, making it more difficult to complete the informal apprenticeship academics must serve.

A spokesman for the federal Education Minister, Brendan Nelson, said he would not comment on the package. But those in the sector say one thing is certain: there will be fewer scholarships and more debt.

Last year, when the Postgraduate Education Loans Scheme (PELS) was introduced, the average PELS loan was $10,076, according to Government figures.

In management and commerce the average loan hit $13,126, in engineering it was $10,496, in health $9355 and in education $6326.

A reply from the Department of Education, Science and Training to a Senate estimates question from Labor Senator Kim Carr illustrates the consequences of Federal Government changes to date:

"The number of domestic postgraduate coursework students declined from 88,838 in 1996 to 84,595 in 2001.

"The total [number of full-time students] for domestic coursework masters' degrees and postgraduate diplomas declined from 41,601 in 1996 to 37,519 in 2001. This is a decline of 9.8 per cent."

Not only will fee hikes continue, warns a recent paper from the Council of Australian Postgraduate Associations (CAPA), but rising debt levels will have long-term personal and community costs.

The association begins the 27-page paper, The Social and Economic Impact of Student Debt, with a single statistic: "By 30 June 2003 Australian students and graduates will owe more than $9 billion to the Commonwealth Government for the cost of their Higher Education Contribution Scheme (HECS) fees."

Almost every student who goes on to further study carries that debt with them. Sometimes it is put on hold because postgraduate students do not earn enough to hit the current $24,365 repayment threshold. Those who do will begin repaying their HECS debt immediately.

The consequences of that debt for graduates, the CAPA argues, are manifold. People put off having children. Accruing additional debt, such as a mortgage, becomes difficult. Saving for their children's education or their own retirement becomes burdensome.

This assessment is challenged by other commentators, notably the conservative think tank the Centre for Independent Studies (CIS) which claims there is no proven link between low fertility and levels of graduate debt.

CIS's Andrew Norton claims the rate of childbirth among women in their late 20s in 2001 who were all charged HECS for their entire degree was the same as that for women in their late 20s in 1996 who had lower levels of HECS.

The CAPA says there is very little Australian research into the broader social and economic impact of student debt and has called on the Federal Government to fund an in-depth study.

In the interim, the CAPA has collated the available Australian research into one study and examined research on student debt from New Zealand, the United Kingdom and the United States. Ultimately it concentrated its energies on the New Zealand Student Loan Scheme because it most closely resembles Australia's HECS.

"An income-contingent repayment scheme [such as HECS] necessitates that those groups in society who earn less will take longer to pay back their debt," the paper says.

"For this reason, women will take longer, on average, to repay their HECS debt than men, and indigenous graduates will take longer, on average, to repay their HECS debt than non-indigenous graduates.

"In 1999, economic modelling in New Zealand revealed that it would take the average male university student 17 years to repay a loan of $20,000, while it would take the average female student 51 years to repay a loan of the same size.

"Recent changes to the interest charged on New Zealand student loans have reduced the projected repayment time to 15 years for the average male university student

and 29 years for the average female student."

© 2003 Sydney Morning Herald

Back to News Index | Back to Home