Student Debts S13 Billion And Rising

Sydney Morning Herald

Wednesday September 13, 2006

Harriet Alexander Higher Education Reporter

UNIVERSITY students and graduates will owe the Government nearly $20 billion in three years' time as debt accumulates by almost $2 billion a year.

They now owe the Government just more than $13 billion, figures provided by the Department of Education to a Senate estimates committee show, and the rate is increasing as fees for individual courses rise. By 2008-09 the debt will reach $18.8 billion.

The average outstanding debt is about $10,500, a spokesman for the federal Minister for Education, Julie Bishop, said. This represents a rise of 7 per cent since last year,

Fees for some courses have now risen to a total of more than $30,000.

Jenny Macklin, the Opposition education spokeswoman, said the debt had been forced by increases in university fees, which have more than doubled under the Howard Government.

"These are massive increases; they're not minor changes," Ms Macklin said. "Under the Howard Government, young people are graduating from university with ever-increasing levels of debt, making it much harder for them to buy a home, start a family and get ahead."

Ms Bishop has attributed the rise in debt to the rising numbers of students. "We have a record number of students - almost 1 million students, which is an increase of almost 50 per cent since 1996," Ms Bishop said.

However, figures from her own department show that domestic student numbers rose by just 0.2 per cent from 2004 to 2005, while the accumulated HECS debt rose by nearly $2 billion. The record number of students was mainly caused by a 4.8 per cent increase in full-fee paying overseas students, who do not incur debts.

HECS was introduced by the Labor government in 1989 and since then about 41 per cent of people have repaid their debt.

The fees increased in 1997 and again last year, when universities were able to charge students up to 25 per cent more. Students begin repaying their debt when their income exceeds $38,149.

FEE-HELP, a loan repayment scheme for postgraduate fee-paying students, began in 2004. Professor Bruce Chapman, a higher education academic at the Australian National University and the architect of HECS, said it was likely the main reason the debt was rocketing to such a degree was the higher cost of a university education. "I don't believe it's a problem for policy, however," he said. "I thought the 25 per cent increase in HECS was not bad policy because it was accompanied by a higher first threshold repayment .. it becomes somewhat easier to pay it."

© 2006 Sydney Morning Herald

Back to News Index | Back to Home