Cheap Loans For University High-flyers

Sydney Morning Herald

Tuesday May 13, 2003

Aban Contractor, and Matt Wade

Loans to students who pay up-front university fees are expected to attract interest of about 3.5 per cent under the Federal Government's radical shake-up of higher education, to be revealed in today's budget.

Government sources say the figure could be capped for up to 10 years.

A new loan program is expected to be announced to help students who choose prestige degrees, such as law, to cover the gap between the Higher Education Contribution Scheme and the extra fee that universities will be allowed to charge for such courses.

The loans will also help other students who pay up-front fees, including Australians who choose to pay full fees and usually get into university with a lower entry score.

Most students now pay their fees through HECS, the deferred loan scheme, and are unlikely to be affected. But the Government is expected to double the number of full fee-paying students.

The budget will also include the Government's already announced $917 million Medicare package. This is designed to shore up the bulk-billing of concession card patients by paying incentives to doctors, and to make it easier for doctors to charge other patients extra.

Speaking on the eve of his eighth budget, the Treasurer, Peter Costello, said it was designed to ``keep Australia strong". But he downplayed speculation that he would spring a surprise with bumper surpluses.

``Most of the developed economies of the world are now in deep deficit the United States, Britain, Europe and being able to balance a budget in today's international climate puts Australia in front of the league," he said.

The shadow treasurer, Bob McMullan, said the budget would mark a significant divergence in policy between Labor and the Government on a raft of domestic issues, especially Medicare.

``The Howard Government, and Peter Costello as Treasurer, are reaping more tax than any government in history and they are cutting back on services," he said. ``They are transferring the cost of education and health from the government to families."

The cash-strapped university sector is hoping that the Education Minister, Brendan Nelson, will deliver about $1.5 billion in new funds for his restructuring of higher education. However, the bulk of the money is expected to arrive in 2006-07.

Universities will be able to charge more for courses such as medicine, law and veterinary science. Extra money will be provided to train more nurses and teachers and the Government is offering a cut in HECS fees for those two courses.

However, students who fail to complete their degrees on time are expected to lose their federal funding.

Under the new higher education loan program, three more schemes dependent on income will be introduced: the fee-paying higher education loan, educational cost loan and overseas study loan. They are all expected to attract the 3.5 per cent interest rate.

The president of the National Tertiary Education Union, Carolyn Allport, said the Government had ruled out a market interest rate on fees.

``It didn't rule out an interest rate it just ruled out the market rate," Dr Allport said. The millions of dollars the Government planned to spend on industrial reform would pay for 30,000 student places.

Mr Costello said the restructuring would deliver big changes in the way universities operated, allowing them greater flexibility and to focus more on students.

``In order to fund those reforms we will be allocating new money," he said.

``But we will be asking the universities to reform themselves quite considerably in order to achieve those objectives."

The Treasurer said universities would not take on any of the research roles of the CSIRO as part of the higher education review.

THE BIG CHANGES

Up to $1.5 billion in new funds over five years, most of it in 2006-07

Universities free to charge higher fees, especially for popular courses such as medicine, law, vet science

New higher education loan program: three types of loans with interest rates around 3.5 per cent

Threshold for HECS repayment to rise: graduates can earn more before starting to repay debt

Full-fee paying Australian students can be 50 per cent of a course, up from 25 per cent

Independent research institutes such as CSIRO to be integrated more closely with universities

Students who fail to complete degrees on time to lose federal funding

More reports Page 6

© 2003 Sydney Morning Herald

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