Most Australians now need a tertiary qualification to obtain a secure job and student loan schemes are critical to the financing for Australia's tertiary education system. The Australian Government has never undertaken a thorough review or evaluation of its student loan schemes, despite it being 34 years since the original Higher Education Contribution Scheme (HECS) was introduced in 1989. It has used these schemes to contain its financial outlays on higher education. The share of course costs funded by students through these schemes has been increased to reduce the cost of the system's... [+] Show more
Most Australians now need a tertiary qualification to obtain a secure job and student loan schemes are critical to the financing for Australia's tertiary education system. The Australian Government has never undertaken a thorough review or evaluation of its student loan schemes, despite it being 34 years since the original Higher Education Contribution Scheme (HECS) was introduced in 1989. It has used these schemes to contain its financial outlays on higher education. The share of course costs funded by students through these schemes has been increased to reduce the cost of the system's expansion. New student loan schemes have been created to assist people while they study because it is cheaper than providing direct assistance. People have been made to repay loans at a faster rate to improve the budget position. The continual expansion of student loan schemes and the tightening of the repayment arrangements over the last three decades mean they now contribute to structural inequities in Australia's taxation system, its intergenerational unfairness and women's economic disadvantage. This paper seeks to show how this is occurring and how it does not have to be the case. It argues that the best way to prevent it is to change the arrangements for collecting student contributions through the taxation system.
Part A of this paper briefly outlines how patterns of post-school education and training have changed over the past three decades and how student loan schemes and their repayment arrangements have been modified by governments over that period. Part B is a brief discussion of what is known and not known about student debt from publicly available sources. It examines in more detail what conclusions might be drawn about the average debt of current students at the conclusion of their study and how long on average that debt will take to repay. Part C looks at the incomes and occupations of former students who have not yet repaid their debts. It examines who was most affected by the recent lowering of the first [Higher Education Loan Programme] HELP repayment threshold and how arrangements might be embedding women's economic disadvantage. It includes a discussion of how HELP repayment arrangements when combined with other elements of the tax-transfer system result in high effective tax rates that reduce gains from employment, particularly for women caring for children. Part D attempts to show how student loan repayment arrangements can be modified to remove the undesirable impacts of the current arrangements identified in Part C.
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