Australian Government's university deregulation policy comes at steep cost to students, leads to billion dollar budget blowout
The annual burden placed on the budget by Australia's student loans program is expected to dramatically increase over the next decade, thanks to the coalition government’s policy to allow universities to regulate their own fees, a new report released on Wednesday has shown.
The Parliamentary Budget Office (PBO), which works independently to inform the Parliament, estimates the country's Higher Education Loan Program (HELP) will cost the budget $11.1 billion by 2025-26, up from $1.7 billion currently -- a blowout that is caused by a forecasted increase in student loans because of the government's university fee deregulation proposal, which is expected to increase the fees students have to fork out.
“The reforms recognised that the lower direct subsidies from the Government would mean that student contributions would rise,” the report noted. “Higher student contributions could be expected to see an expansion in the HELP loan portfolio in the form of larger HELP loans.”
But the report also points fingers at the general "demand driven approach" to higher education funding and the expansion of HELP loans to vocational education as factors for the expected billion dollar blowout for uni student debt, a significant percentage of which will never be repaid.
In fact, the report also stated the number of students accessing loans through the HECS – Higher Education Contribution Scheme was 522,000 in 2015, a boost of 11.2 percent over 5 years. This number is only expected to grow, rising to 696,000 by 2026.
Under HECS, students are able to borrow from the government to pay for their courses, and repay the money when they are earning an annual income of above $54,869 for 2016-17.
The report has thrown the spotlight back on the Coalition's university deregulation plan, which has been deferred by Education Minister Simon Birmingham until next year. If implemented, it will see a 20 percent cut in government funding to universities, which is expected to be accommodated by allowing institutions to set their own fees.
“We are not taking away from universities in terms of what they overall have to spend but there is an argument to say you need to have a look at the balance of what students contribute and what the government contributes,” Birmingham said to SkyNews.
