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Australian Students Being Asked to Pay More for Nothing

Author: Andrew MacDonald (NTEU National Office) : Contact:

Published: 2016-12-05

Synopsis and Key Points:

The loan fee increases cost of education for students, size of student debt, and adds to overall HELP debt.

Main Digest

The National Tertiary Education Union (NTEU) has come out in opposition to a proposal to charge a 15% loan fee on all HELP loans, including HECS loans for undergraduate students at public universities.

The Grattan Institute report, Shared interest: a universal loan fee for HELP, seeks to advise the federal government on recouping the costs associated with the various tertiary education student income contingent loan schemes under the umbrella of the Higher Education Loans Program (HELP), including the rapidly rising level of debt.

"While the NTEU appreciates the analysis of the problem presented in the report we dispute their conclusion that a 15% loan fee for all students would be fair," said NTEU National President Jeannie Rea.

"Currently VET and full fee students pay loan fees of 20% and 25%, whilst domestic undergraduate students in Commonwealth Supported Places (CSPs) do not pay a fee on their loans. Our position has been that the loan fees should be abolished, rather than expanded.

"The bottom line is that the loan fee increases the cost of education for students and the size of the student's debt, and adds to the overall HELP debt," explained Rea.

"In today's values, Grattan's 15% loan fee would add $2800 to the cost of a three year nursing or arts degree and $7800 to the cost of a five year law or medical degree.

"A loan fee would not add one additional cent to university funding to improve education or student support. The money goes straight into consolidated revenue. In other words, university students are being asked to pay more for effectively nothing.

"While masquerading as being fairer, the Grattan proposal is actually highly inequitable. Under their scheme students who can afford to pay their fees upfront, and therefore not need to take out a HELP loan, would pay considerably lower (13%) fees compared to students who need the loan to finance their education.

"The best way to rein in the escalating costs associated with Australia's income contingent loans scheme is not to impose additional costs on students taking out and repaying their loans, but rather to control the total level of debt and individuals' capacity to repay their debt, and to make providers more accountable through a better planned and managed tertiary education system.

"There is no doubt that the recent explosion in the level and costs of student debt outlined in the Grattan report is a direct result of deregulation of the vocational education sector which resulted in thousands of students being enrolled in courses often of dubious value that many could not complete, but through which they accrued tens of thousands of dollars of debt they were never likely to repay.

"Making future students pay for policy failures of the recent past is not the solution to the financial sustainability of Australia's world-class tertiary education system.

"The whole proposal is about reducing the government's costs, not about improving the access to nor the quality of tertiary education, and should be rejected," concluded Rea.

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