Left Short In Fees Shake-up

The Age

Monday January 31, 2005

Kath Dolan

Students taking the full-fee path could run out of funds, advisers warn. Kath Dolan reports.

FULL- fee-paying university students who take up the Federal Government's loan scheme could run out of money before finishing their courses. The new loan scheme, FEE-HELP, which replaced existing schemes on January 1, allows students to borrow up to $50,000 for tuition fees and, like the Higher Education Contribution Scheme, defer repayment until they are working.

The Government is selling FEE-HELP as an equity measure that, along with new Commonwealth and university-funded scholarships, will help offset the social costs of partially deregulating higher education.

Even critics of the user-pays philosophy underpinning the reforms concede FEE-HELP will enable students who are not offered a Commonwealth-funded (or HECS) place to gain a university education, rather than miss out because they cannot pay tuition fees upfront.

But student financial advisers and senior university staff responsible for implementing the new loan system say it also has some serious drawbacks. Undergraduates in particular may find they run out of money before graduation, especially if they change courses, fail subjects, enrol in lengthy degrees or go on to postgraduate study.

FEE-HELP replaced existing loans schemes for postgraduates, Open Learning students and overseas-trained professionals undertaking bridging courses. It allows these groups and undergraduates, paying full tuition fees at eligible public and private higher-education institutions, to borrow up to $50,000 towards the cost of tuition fees.

The loan is indexed annually and undergraduate students pay an additional 20 per cent loan fee (taking the cost of a $50,000 loan to $60,000). Compulsory repayments via the taxation system start when students' taxable income exceeds $36,184.

Vince Callaghan, student counsellor at Deakin University in Warrnambool, says that in rural and regional areas there is widespread confusion about the costs associated with university education. He conducts workshops called Can My Wallet Afford It? to explain the issues to parents and secondary school students from Swan Hill to Horsham, everything from FEE-HELP to the Youth Allowance and rental costs.

This information "should be out there and it should be up to DEST (Department of Education, Science and Training) and Centrelink", he says. "There's a lot of confusion about what are full-fee-paying places and what are Commonwealth-supported places. This may very well reflect the huge number of students this year who have put in to VTAC (Victorian Tertiary Admission Centre) for full-fee-paying places."

VTAC statistics for 2005 show a 50 per cent increase in offers of full-fee-paying domestic places compared to 2004. This year, 26,077 domestic applicants listed full-fee places among their preferences (an increase of 29 per cent on 2004). Of these, 1748 nominated full-fee-paying places as their first preference (an increase of 22 per cent on 2004).

Mr Callaghan says a lack of publicity about FEE-HELP means "a lot of people don't know there's a 20 per cent administrative charge".

RMIT University academic registrar Sue Jellett says DEST does provide "fairly detailed information booklets on the various options available to students and they're fairly explicit about what that means in terms of commitment and repayment".

But she says students tend to take the booklets away on enrolment day and then "forget all about them until after the first census date".

Meagan Adcock, student accommodation and financial services officer at La Trobe University, says students taking out a FEE-HELP loan need to consider the effects of indexation and the $50,000 cap.

"If a student doesn't do their research properly, they'll come out with a few surprises along the way about what exactly it does cost," she says.

Mr Callaghan says the scheme is likely to help postgraduates, most of whom already pay full fees. But he says undergraduates who want to take on postgraduate study may find FEE-HELP does not stretch far enough. He says most three or four-year undergraduate courses "will come under the cap" but adds that students in longer or more expensive courses may run out of money "at a critical time, like in their final year".

The cap is tipped to rise - the cost of many highly sought-after courses including medicine and dentistry exceeds it already - and tuition fees are likely to follow. Students who run out of money face some unpalatable choices: finance the shortfall themselves, try to transfer to a HECS place within the university or elsewhere, or drop out.

According to Roger Deutscher, student financial aid adviser at the University of Melbourne, the benefits of FEE-HELP to undergraduates are "dubious".

"A lot more students will be tempted to accept a place knowing they've got enough money through the FEE-HELP system to pay for the first year and maybe second year," he says. "At this university, the full $50,000 will not be enough to get through most courses."

Many students will assume they'll achieve the academic results required to transfer to a HECS place within a year or two. But Mr Deutscher says competition for subsidised places is "really fierce" and transfers at the University of Melbourne now require a 75 per cent average across all subjects. Secondary students don't realise how hard this is to attain, he says.

"The danger is that students will borrow as little as possible and try to make up the difference with money they earn from working," says Mr Deutscher. "This will really diminish the amount of time they can spend on their studies, and it's likely to have an impact on their grades."

The impact of FEE-HELP in the long run may be that some students may delay buying homes and starting families, says Ms Jellett.

RMIT University Student Union's welfare and education officer John Tapinos says nobody knows what debt is like until they have experienced it - "the pressure it puts on people to have to do work that they don't like, or to reprioritise their lives and their time".

Information: www.goingtouni.gov.au/

WHAT'S THE DAMAGE?

THE cost of domestic, full-free places in undergraduate courses varies widely between universities and depends on the number and type of subjects chosen. This makes it tricky for prospective students to even estimate the price of a degree.

All universities provide online tools for calculating exact tuition costs for 2005 but these require prospective students to specify which subjects they'll choose (subject costs can vary even within courses).

© 2005 The Age

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