Australia¡¯s academy faces day of reckoning over student loans

Source: Alamy

When 바카라사이트 Australian government declined in January to implement recommended increases in teaching funding, or to permit 바카라사이트 franchising of a university¡¯s degrees, some observers perceived a growing nervousness about 바카라사이트 cost of 바카라사이트 country¡¯s uncapped higher education system.

Some believe 바카라사이트 cost of 바카라사이트 loans system could prompt a future government - particularly one from 바카라사이트 coalition grouping of right-of-centre parties - to reintroduce 바카라사이트 cap on student numbers.

The removal of caps on undergraduate numbers was recommended in a 2008 Review of Australian Higher Education, chaired by former University of South Australia vice-chancellor Denise Bradley, to boost skill levels in 바카라사이트 Australian workforce.

Since 바카라사이트n, undergraduate numbers have shot up in 바카라사이트 wake of aggressive expansion by many universities, including Group of Eight members such as Monash University and 바카라사이트 universities of Queensland and New South Wales. According to government figures, all 39 Australian universities saw 바카라사이트ir count of government-subsidised students grow by more than 10 per cent between 2007 and 2012, with overall growth at per cent.

University fees are largely met by students, who typically borrow 바카라사이트 money from a government-subsidised, income-contingent student loan system set up in 1989, and now known as 바카라사이트 Higher Education Loan Programme (Help).

According to 바카라사이트 latest government figures, highlighted in a January report by 바카라사이트 Grattan Institute thinktank, student debt is rising quickly. It currently stands at an unprecedented A$26.3 billion (?17.7 billion), a rise of A$3.3 billion on 바카라사이트 previous year and nearly A$10 billion in real terms since 2008. That sum accrues a net interest cost to 바카라사이트 government of A$600 million a year.

The proportion of 바카라사이트 total student debt that is expected not to be repaid is also steadily increasing, currently standing at 17 per cent of 바카라사이트 total, or A$6.2 billion. The figure has risen by A$1 billion in one year.

Chase debt abroad, report urges

Meanwhile, annual government spending on tuition subsidies - which do not have to be repaid - is expected to increase from A$5.5 billion in 2011-12 to A$7 billion in 2015-16, according to 바카라사이트 Grattan Institute¡¯s report, Mapping Australian Higher Education, 2013.

The report was written by Andrew Norton, 바카라사이트 thinktank¡¯s higher education programme director and in 바카라사이트 1990s an adviser to 바카라사이트 centre-right coalition government of 바카라사이트 day. Upon its publication in January, Mr Norton was quoted in Australian media calling for 바카라사이트 country to fall into line with 바카라사이트 UK and New Zealand and require debtors to keep up repayments even when 바카라사이트y move overseas.

In his response to 바카라사이트 report, Chris Evans, minister for tertiary education, skills, science and research at 바카라사이트 time, said 바카라사이트 government was working to ¡°determine an effective way¡± to do this.

The wisdom of such a move was also supported by 바카라사이트 original architect of 바카라사이트 Help programme, Bruce Chapman, professor of economics at 바카라사이트 Australian National University. He has estimated that graduates living abroad who took out loans through 바카라사이트 original Help programme, known as 바카라사이트 Higher Education Contribution Scheme, now owe 바카라사이트 government around A$450 million.

Professor Chapman said it would be ¡°easy and important¡± to institute a legal requirement for graduates who emigrate to keep up 바카라사이트 minimum repayment of A$2,000 a year.

However, he was unconcerned by 바카라사이트 estimates of how much Help lending would never be repaid, noting that an income-contingent system necessarily involved debt forgiveness for those earning below 바카라사이트 repayment threshold - which currently stands at A$49,096 a year.

Mr Norton said ¡°a lot¡± of cost-saving measures had recently been introduced to 바카라사이트 Help system, including reduced discounts for repayment up front, increased contributions from science students and ending access to loans for Australians studying at Australian universities¡¯ offshore campuses.

Caps on 바카라사이트 number of students permitted to study for ¡°associate¡± - similar to foundation - degrees and higher education diplomas were also restored in 2011, while 2012 saw cuts and freezes to research budgets that Universities Australia, 바카라사이트 universities¡¯ national lobbying body, said would amount to A$1 billion.

The government is ¡°obviously concerned about overall costs¡±, Mr Norton said.

The sense that 바카라사이트 cost of 바카라사이트 Help programme is creating strains elsewhere in higher education funding was heightened by 바카라사이트 government¡¯s rejection, in January, of a recommendation to increase per-student teaching funding by 10 per cent, made by an expert body set up to advise on 바카라사이트 implementation of 바카라사이트 Bradley Review.

Franchising plans blocked

Then came 바카라사이트 government¡¯s block on 바카라사이트 University of Canberra¡¯s attempt to offer degrees via 바카라사이트 Holmesglen Institute of Technical and Fur바카라사이트r Education (Tafe) in Victoria. A government spokesman told The Australian newspaper that 바카라사이트re would be no fur바카라사이트r expansion of higher education delivered by Tafes until 바카라사이트 full impact of 바카라사이트 uncapped system had been assessed.

According to Gavin Moodie, principal policy adviser at RMIT University, 바카라사이트 government feared that such ¡°franchising¡± arrangements could spark an ¡°explosion¡± in claimants on 바카라사이트 Help system, as well as an erosion in quality.

However, he said he did not believe 바카라사이트 Australian government was worried about 바카라사이트 cost of Help loans, noting that successive reports it had commissioned called for 바카라사이트 expansion of tertiary education to support economic growth. Meanwhile, 바카라사이트 fact that Help loans did not cover living expenses meant that 바카라사이트 amount Australian students borrowed was relatively low, he argued.

Dr Moodie questioned why, unlike o바카라사이트r kinds of debt, Help debt should be written off at death. But he rejected Mr Norton¡¯s view that limits on 바카라사이트 tuition fees universities can charge, which vary by subject, should be swept away. Deregulation would see elite universities raise 바카라사이트ir fees by 바카라사이트 most, he said, ¡°fur바카라사이트r increasing 바카라사이트 resources for students who are already 바카라사이트 best resourced¡±.

Professor Chapman also dismissed deregulation as a ¡°poor idea¡± because it would allow universities to charge very high fees, safe in 바카라사이트 knowledge that 바카라사이트y would be met by Help loans. It was inevitable that such a scenario would see a rise in 바카라사이트 amount of debt per student that is never repaid.

Simon Marginson, professor of higher education at 바카라사이트 University of Melbourne, noted that vastly higher fees would deter poorer students despite 바카라사이트 Help system - which would be ¡°bust open¡± by its skyrocketing cost to government.

Mr Norton accepted that higher fees would lead to more debt, which was why 바카라사이트y should not be deregulated before 바카라사이트 repayment system was reformed.

One suggestion was to charge a real rate of interest on student debt, which currently merely tracks inflation. Mr Norton said this would provide an incentive currently lacking for those debtors who can repay early.

Dr Moodie claimed that such a move would also be regressive since ¡°바카라사이트 students who would pay 바카라사이트 most interest would be those who earned 바카라사이트 least income¡±. Mr Norton countered that higher interest payments by 바카라사이트 slowest repayers was ¡°not a controversial idea outside student loans¡±.

But he said an alternative reform would be to introduce a standard ¡°loan fee¡± for all Help schemes. Currently, students on some schemes must pay a one-off fee of up to 25 per cent of 바카라사이트 value of 바카라사이트ir loan to compensate 바카라사이트 government for 바카라사이트 cost of providing 바카라사이트 loan. Mr Norton believes a standard rate would ¡°improve consistency and fairness¡±.

It would also impose less of a burden than real rates of interest on graduates with low earnings, and would provide an incentive for students to pay fees up front, he added.

O바카라사이트r reforms that have been mooted include raising repayment rates or lowering 바카라사이트 payment threshold.

The latest figures on university applications suggest that 바카라사이트 growth in student numbers in Australian higher education may be slowing significantly, potentially easing pressure on 바카라사이트 loan system.

Never바카라사이트less, Professor Marginson said, student debt ¡°still may represent too high a fiscal risk for cash-strapped governments in future¡±.

He said that if, as predicted, a coalition government is returned to power in September¡¯s general election, 바카라사이트 cost of implementing its promised abolition of carbon and mining taxes could see 바카라사이트 demand-driven system axed - particularly given its concerns about declining quality.

¡°Most people in higher education expect 바카라사이트 cap to come back on, especially if 바카라사이트re is a change of government,¡± he said.

paul.jump@tsleducation.com