Australian graduates who work overseas might still have to pay off their university loans as the federal government looks to reduce the estimated $6.2billion that will never be repaid.
Subscribe now for unlimited access.
$0/
(min cost $0)
or signup to continue reading
The Grattan Institute’s 2013 Mapping Australian Higher Education report finds that students and former students have accumulated HECS and HELP debts of $26.3billion and almost a quarter from HELP loans will never be recouped.
However, Professor Bruce Chapman, the architect of the HECS system that later became the HELP system, says the size of the student debt is a non-issue.
‘‘Why should anyone care about the size of the debt?’’ he told The Conversation, an online forum focusing mainly on the academic and research sectors.
‘‘We don’t care about the size of the debt. We care about people’s access to the system.
‘‘Of course, you accumulate a big stock of debt because there are so many graduates.’’
The report says $6.2billion is ‘‘doubtful debt’’, or money unlikely to be recovered.
This is a rise of $1billion from the previous year.
The report says most of the bad debt is owed by HELP debtors who are forecast to die or move overseas before they finish repayments.
Other graduates never earn above the annual threshold for repayments, which is $49,095 in 2012-13.
Report author Andrew Norton says the total debt and bad debt amounts are growing because the original designers of the scheme didn’t foresee so many people would be going to university or subsequently working overseas.
Like Prof Chapman, he didn’t think the amount of student debt was necessarily a problem.
‘‘That doubtful debt is not a problem; it’s a deliberate part of the design of the loan scheme,’’ Mr Norton said.
‘‘But I think it is expanding in ways which the people who designed the loan scheme back in 1989 would never have envisaged and therefore didn’t take into account.’’
The cost to governments was only going to increase as more people went to university.
Mr Norton said people going to work overseas before paying off their loans hadn’t been a problem, but the loan amounts were much higher now than the original $2000 annual flat fee.
‘‘Now that we’ve got people routinely leaving university with $20,000 to $30,000 in debt, people leaving the country for example, is an issue in a way that it just wasn’t,’’ he said.
He believed the government probably should look at ways to make the loan scheme cheaper for taxpayers.
Labor Parliamentary Secretary Mark Dreyfus said Tertiary Education Minister Chris Evans had asked his department to look at ways of retrieving the money from graduates who were overseas.
The National Union of Students is concerned one of those ways might be to deregulate fees, meaning students could be charged more.
‘‘Students at university are paying more for their education than ever before and it now takes around a decade for graduates to pay off the average HECS debt,’’ national president Jade Tyrrell said.
‘‘It is crucial that students are not forced into shouldering the burden of paying even more for their education.’’
Liberal MP Steve Ciobo said university students using the public education system had a responsibility to repay the taxpayer assistance that had been afforded to them.
The Grattan Institute report also criticised the plethora of different HELP arrangements in place.
It said as new schemes were added, the system has become ‘‘confusing and sometimes seemingly unfair’’ because of different arrangements for loan fees and repayment discounts.
‘‘You’ve got all these differences that don’t seem to have any kind of real, explained policy rationale,’’ Mr Norton said.
‘‘The scheme has been fiddled with over the last 25 years and we’ve ended up with something that is pretty messy and arguably unfair to some students.’’
He said it may be time to try a single, simpler loan scheme.
AAP
WHAT THE GOVERNMENT PAYS FOR UNIVERSITY STUDENTS
$3.8 billion in new HELP loans in 2011-12.
$5.5 billion in Commonwealth per-student funding in 2011-12.
$2.2 billion income support including Youth Allowance and Abstudy in 2011-12.
$26.3 billion total HELP debt owed to Commonwealth as at June 30, 2012.
$6.2 billion HELP debt expected to never be repaid as at June 30, 2012.
$580 million interest bill to Commonwealth on HELP debt for 2011-12.
Source: The Grattan Institute