The government are at last doing something about the gouging of Coles and Woolworths. Thank you to the Government. There seems to be another gouging going on with the University charging 7.2% on students outstanding fees. This is far above the percentage that Banks charge. The poor students end up with fees up to 50,000 - 70,000 debt at the end of their studies. No wonder they can’t afford to purchase a house even if they worked their way through Uni. I believe this is gouging.
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HECS (and other education related loans) indexation is controlled/set by the Commonwealth Government and not a university/education institution. These debits are also with the government and not the education institution, and repayments to the government is the the taxation system.
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The fees for Australians who attend University are legislated and set by the Federal Government. They are indexed based on the CPI (inflation).
Originally all courses were charged the same fee per year for full time students. Subsequent Federal Govts made decisions to split the courses into different tiers, initially reflective of the earning capacity of each graduate course. A further change has been to adjust the course fees on perceived national need. Courses where there are insufficient graduates to meet workplace demand have lower fees and those where graduates exceed demand are more expensive. The following article explains a little more about when the changes were made and why.
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HECS debt can and is used by banks in assessing debt loads. For many financial institutions, HECS is treated as regular debt and requires disclosure by the applicant.
If a student is studying a course that is a Commonwealth Supported Place (CSP), the Government meet some of the cost of the course, the remaining cost is the student’s obligation to meet. The Student obligation is what we term HECS and the Government provide a loan to the student to pay this amount if the student defers payment, the Government pay the HECS amount to the institution on the student’s behalf. If the student pays the entire fee directly to the Institution when payment becomes due then no HECS debt accrues with the Government, if only a partial payment is made then the outstanding amount is accrued as a debt/loan.
CPI is used to work out the amount of interest on the loan. Each year if a student is studying, the assessment of the amount of the current Semester’s loan occurs shortly after what is called the census date and if the Student has not paid the Semester’s calculated full amount to the Education Institution, then the outstanding amount is paid to the Institution by the Government and is added to the loan amount. Then each year the interest calculated using the CPI percentage is added to the loan. While we have this current high inflation, the Government recover more though likely less than Banks would charge on a loan, recover here means the amount of interest added to the loan not payments on the loan. For NAB as an example the rates range between, at the comparison rate, 7.91% p.a. to 21.33% p.a ". In 2023, “the average interest rate quoted to personal loan borrowers was 13.87% p.a., according to Money.com.au borrower data”. When CPI is low and to be fair it usually sits very low (around 1 to 3% per year until recently) then the Government do not recover anywhere near what the Banks would be asking interest wise. Payments on HECS debt are paid by the student in any year voluntarily if they wish and is recovered involuntarily through the tax system when they start earning income above the legislated income band/bands by tacking on an extra tax percentage when the tax return is assessed.
I don’t like that HECS is levied on a first degree for any student, if we want more people to continue higher education I think we should have a no debt system for any first degree, as it existed when I did my first one. It was hard enough paying for the other life costs without thinking of having to pay tuition costs on top of that (or even accruing a debt for that cost). So gouging, I don’t think so but as a necessary fee I don’t think it should be.
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They are holding enquiries into supermarket behaviour, that might result in some evidence being presented that establishes whether gouging has happened and it might result in some action. I am not offering my thanks just yet.
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What I find astonishing is why Arts degrees are so expensive.
They may be an advantage in getting a job, or a first step in then doing post-grad specialised courses, but actual vocational tertiary degrees or diplomas are far more useful, and cheaper.
In some vocations the courses are HECS free now.
In my view, people should consider what they would like to try as a profession when in their final years of secondary school, and then consider the specific tertiary courses to apply for to get there.
It seems many have no idea, and then go off to Uni doing an Arts degree and rack up a huge debt whilst they decide.
It is also worth noting that since the budget is in deficit, the government borrows money at the bond rate to provide the loans to students. The composite rate for I bonds issued from November 2023 through April 2024 is 5.27%.
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HECS has been tinkered with for decades. I remember the argument that a Vet degree should be dearer as it is more expensive to provide, whereas an Arts degree should be cheaper as the lecture material doesn’t change and most of it can be read at home.
Then too many kids were going after “sexy” degrees where there were no jobs. The Govt increased HECS to dissuade them, but it didn’t work. Eldest grandie was fascinated by Forensics & law on TV. I tried to explain that life didn’t work out like TV. She did a triple degree in Law, can’t get a start, so spent the last 2 years working in a dress shop.
I did several degrees. You could pay your HECS as you went with a discount for early payment. I was always working and studying. That way I didn’t have a debt.
Whether we need to get into discussing government finances - is that really how Treasury Bonds are issued? I always understood Government borrowings were against the bottom line of the budget. IE to balance the books when total expenditure across all budget items exceeds income.
What does parliament have to say?
Footnote:
Australia once had a higher education system that favoured the children of the more prosperous and privileged. The opportunities for many young Australians to improve their knowledge/understanding, education and life opportunities changed in 1974. It remained at the time a financial challenge for those not living in a University - capital city to have fair access.
What ever government policy is today or going forward, isn’t the fundamental need to provide every Australian access to the same level of educational opportunity regardless of personal circumstances or financial capacity?
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One problem is that the quality of the teaching doesn’t match the high cost of subjects and fees
Our immediate and extended family have a variety of experiences. Includes those currently apprenticed (obviously not University) to those who have multiple tertiary qualifications or have been employed to teach at University. It’s not a statement they would agree with.
Australian Universities are well respected and rank well above our population and economic position would suggest.
No two are alike, and many cater for different needs and demographics. External studies included. In my day there were minimal provisions for external course work, no gap years and a system that insisted one went straight from school to university. With few exceptions mature age students were a no no. We’ve come a long way, for the better IMO.
Discussing the quality of higher education in Australia is a separate topic, I I would possibly agree that my own personal experience as well as friends who are academics would agree that there has been a change in quality in the past 20 or so years.
Getting back to the original point, there are financial advantages for carrying out higher education such as a degree. The Grattan Institute found that graduates have salaries around 6% greater than peers without degrees. If one looks at the jobs which have the highest salaries, almost all of these are professionals where higher degrees are required to practice in these professions.
While not every graduate may not have higher financial advantage, most do compared to those which aren’t supported by part government funding to attend a university.
Arts degrees are expensive because the Morrison government made it that way and Albanese hasn’t had the guts to undo those charges.
Fees for Australian students are determined by the government, not the university.
What fees and charges are these? Australian students pay fees which are set by the government not the university. The loan system for Australian students (HECS/HELP) are indexed by inflation and last year that figure was 7.1%. This year it will be about 4.5%. Again, this is set by the government, not by the university.
If you are talking about a late payment charge of some kind, then 7.2% is quite low in today’s world.
No, fees are set by the course providers, not the Gov.
The Gov funds tertiary places, up to a certain level, and for certain courses. After that, the difference is made up with the availability of HECS, or HELP, as loans.
One can avoid the loans by simply paying the tertiary provider the course fee. Which is not an option for many and do need to borrow money.
I think if it was made clear to those coming out of secondary school and contemplating a tertiary course, that some very big course fees will apply, they may think more carefully about what they do.
The HECS scheme just seems to create an illusion that UNI is free, because one just simply defers the course fee payable, rather than paying it up front.
Domestic students (most Aussies are for their basic first degree) enrolled full time are eligible for a CSP (Commonwealth Supported Place):
Different study areas are grouped into ‘bands’ by the Government. The bands set the maximum student contribution amount that can be charged for units on a full-time study load.
There may be differences between Universities of the cost per unit. The maximum cost for students with a CSP is determined by the Commonwealth. Yes, the Universities are free to charge less. For students who are not supported - typically foreign or post grad students, it’s up to the University.
But the number of CSPs are limited. And those places generally go to those students who meet the entrance requirements with the ATAR score.
Universities today are mega institutions and I wonder if the pro-academic mentality is subsumed by corporate responsibilities. Free market theorists no doubt rejoiced at the introduction of fees but did they consider at what cost?
If it is the case as Mr Google tells us that “Countries which spend a higher percentage of their GDP on higher education research and development have, on average, higher levels of GDP per capita.” then we may be looking at lower levels of Australian GDP per capita?
