Millions of young Australians to face crippling HECS debts

Not only will future generations of Australians face higher debts thanks to the Abbott Government’s Budget of broken promises but existing students and graduates will be hit as well.

University students and graduates with existing HECS/HELP debts – currently about 1.2 million people – will be hit with thousands of dollars extra in interest on their loans after 2016.

“Many young people and their families will be saddled with unmanageable debts,” Senator Carr said.

“Some university degrees could cost up to $100,000-$200,000 over time as a result of the Abbott Government’s deregulation agenda.

“I’m deeply concerned that the cost of a degree, the debt burden will become prohibitive for young Australians from low- and middle-income families.”

Before the election, the Abbott Government promised:

“The Coalition has no plans to increase university fees.”

CHRISTOPHER PYNE - MEDIA RELEASE – 26 AUGUST 2012

Both existing and new HECS/HELP debts will feel the impact of the Abbott Government’s changes to interest rate indexation from CPI of 2 per cent to the Government Bond rate, capped at 6 per cent.

Shadow Higher Education Minister Kim Carr said that at compound Government Bond rates those HECS/HELP debts would grow rapidly.

Currently there are 750,000 undergraduate students and 250,000 postgraduate students who will face future HECS/HELP liabilities.

The current Government Bond rate of 3.8 per cent is historically very low, and more typically stands at 5 to 6 per cent (see table below).

“Vice-Chancellors from University of Technology Sydney, the University of Canberra, University of Newcastle and Charles Sturt University have spoken of the crippling effects of massive increases in the cost of a degree.

“Professor Bruce Chapman, the architect of HECS, has spoken of the potential for $120,000 degrees in this country.

“Other experts such as Geoff Sharrock of the LH Martin Institute at the University of Melbourne have talked of degrees costing up to $200,000.

“We’re talking about massive amounts of debt – the current outstanding HECS/HELP debt was estimated as $26 billion in the 2013-14 Budget papers.

“By the end of the current Forward Estimates, that is, over the next four years, the debt was projected to grow to $42 billion – and that’s without factoring in the Abbott Government changes.

“You don’t have to be Einstein to understand how compound interest on these sums will run into the millions – all of which will be shunted on to students.”

Senator Carr said none of these changes had been put to the Australian public before the election.

“In fact, the Government promised there would be no changes to higher education,” Senator Carr said.

"We will ensure the continuation of the current arrangements of university funding."

REAL SOLUTIONS, LIBERAL PARTY POLICY DOCUMENT- CHAPTER 17, PAGE 40 & 41 – 27 JANUARY 2013 

“Students and graduates have every right to be angry about these proposals,” Senator Carr said.

“Labor will oppose the Abbott Government’s inequitable changes to higher education and fight to maintain the current HECS/HELP system, widely acknowledged as one of the finest in the world.” 

As at

10-year Treasury bond rate

HECS/HELP Indexation rate

          Difference

30-Jun-13

3.76%

2.00%

1.76%

30-Jun-12

3.04%

2.90%

0.14%

30-Jun-11

5.21%

3.00%

2.21%

30-Jun-10

5.10%

1.90%

3.20%

30-Jun-09

5.52%

3.90%

1.62%

30-Jun-08

6.45%

2.80%

3.65%

30-Jun-07

6.26%

3.40%

2.86%

30-Jun-06

5.79%

2.80%

2.99%

30-Jun-05

5.11%

2.40%

2.71%

30-Jun-04

5.87%

2.40%

3.47%

30-Jun-03

5.01%

3.10%

1.91%

30-Jun-02

5.99%

3.60%

2.39%

30-Jun-01

6.04%

5.30%

0.74%

30-Jun-00

6.16%

1.90%

4.26%

30-Jun-99

6.27%

1.20%

5.07%

30-Jun-98

5.58%

-0.10%

5.68%

30-Jun-97

7.05%

2.00%

5.05%

Source: Reserve Bank of Australia, Interest Rates, Capital market yields - Government bonds daily and Australian Taxation Office

SATURDAY, 17 MAY 2014


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