How Budget 2014 Makes University Study Far More Expensive

Changes in the 2014 budget mean that HELP repayments will be bigger and kick in sooner — and studying for a PhD could now cost as much as $30,000. Emmaline Bexley from the University of Melbourne explains how the changes will hit students — and potentially discourage research.

Student picture from Shutterstock

The announcement in last week's Federal budget that fees will apply to postgraduate research for the first time has so far flown under the radar. But the effects will be significant. Coupled with the effect of compound interest on undergraduate fees while a postgraduate is studying, a PhD could cost upwards of $30,000.

Under the budget changes to higher education fees have been extended to research Masters and PhDs. Until now, the vast majority of these researchers did not pay fees, in recognition of the central role they play in growing Australia's capacity in research and innovation across the disciplines.

Postgraduate study is integral to research

Postgraduate researchers undertake much of the day-to-day research conducted in our universities. Because the PhD often provides the opportunity to pursue self-directed research, research at this level is an important source of new and unexpected discovery. And, of course, when these students graduate they become the research workforce on which Australia depends for further discoveries, innovations and applications of ideas.

It is important that potential PhDs and Masters by research students are not dissuaded from undertaking study at this level by the regressive nature of the proposed changes to higher education fee arrangements. The 2008 House of Representatives Standing Committee inquiry, Building Australia's Research Capacity, raised concerns that postgraduate research already faced strong competition from the workforce due to the wages forgone while postgraduates studied.

Researchers won't be able to afford the research

From 2016, postgraduate research places will be subject to HECS fees of between $1700 and $3900 per year. As with the deregulation of undergraduate fees, this is an about-face in the way the public benefit of higher education — in this case the highest form of education — is valued and funded.

Last week's budget also introduced real interest on HECS debts from 2016 — for both new HECS debts and for current graduates who still carry a HECS debt.

Many questions have arisen about the introduction of real interest on HECS: is it fair to apply it to graduates who entered into HECS arrangements with no knowledge that interest would be introduced after the fact? Is it reasonable that the new lowest repayment rate (2%) is below the interest rate, so that even graduates making repayments through the tax system will be falling behind as cumulative interest grows their debt?

A question vital to the future of Australian research and innovation has been missed. How will the changes to undergraduate higher education fees affect participation in postgraduate research education?

The majority of postgraduate researchers will have an undergraduate HECS debt. Taking four years out of the workforce to do a PhD will mean that debt will quietly accumulate compound interest as research candidates study (it is presently adjusted each year for CPI only).

On an undergraduate debt of, say, $60,000 — which may be modest as the majority of postgraduate researchers are at Group of Eight institutions, and these institutions are likely to have the highest undergraduate fees — a four-year PhD would cost an additional $10,000 in interest on the undergraduate debt alone. And that's at today's 10-year bond rate — the rate to which interest on HECS is pegged. If the bond rate rose to or above 6 per cent, at which the new interest rate on HECS is capped, accumulated interest would be more than $15,000 over four years.

Add to this the $7000 to $16,000 that getting a PhD will cost in fees, and our brightest students will need to think very carefully about whether a PhD is really worth it.

People with higher degree qualifications go into a variety of areas of employment, but the PhD is no guarantee of high income. Indeed, if the graduate pursues a career in academia they will be likely to undertake further, postdoctoral research work, at a pay rate that is unlikely to be far above the median wage.

Further, research undertaken by the Centre for the Study of Higher Education in 2011 showed very high levels of job insecurity among early career academics, particularly in research-only roles.

Our brightest students will need to ask themselves if an extra $30,000 for a PhD is a bridge too far.The Conversation

Emmaline Bexley is a Lecturer in Higher Education at University of Melbourne. She does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations.

This article was originally published on The Conversation. Read the original article.

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Comments

    I don't see how the government thinks this is a good idea. It just discourages higher education. I'm certainly not looking forward to having interest on my already deep hecs debt. This isn't cool.. :(

      Nothing wrong with less people doing Uni. Uni was never meant to appeal to the masses, and infact, when it was set up it was only catering to 5% of people.

      Generally speaking, university is meant to cater for about 30% of the population, TAFE for 60% and the other 10% go immediately into work after high school.

      Unfortunately, every company these days seems to think that a uni degree is required for everything, even answering the phones!

      Leave Uni to teach Sciences (Medical, Bio, Phy and Chem), Engineering (struct, auto, areo, etc), Legal and Politics, and then have TAFE do the rest.

      That is what it was meant to do anyway...

        .....and who cares if those fewer students all come from higher socioeconomic regions as the lower classes cannot afford or justify the debt.....

        Your assumption is also that the degree is only there as a means to a directly related job. Education is actually an investment in a smarter society and therefore a better society. It has little to do with work (except specificially focussed degrees) and more to do with creating critical and abstract thinkers who contribute not only with work skills but with societal contributions that advance a country. A smarter population is a better population.

          Yes, you are right, nothing wrong with less people going to uni, as it's already over crowded enough. However there is still this 30 percent of the population that wants to go and further the country, if not, the world. This is seriously limiting it, they are just not thinking about the future of the nation.

        Have to agree with you there. But unfortunately TAFE fees will also increase ten folds.

    is it fair to apply it to graduates who entered into HECS arrangements with no knowledge that interest would be introduced after the fact?

    Is it 'legal'?, i'm sure most fresh uni students didn't bother to read the T&C they just wanted to further the education to get a better job, that pays more tax, shame on them right and i know this is a government level thing but is it actually 'legal' for them to suddenly add interest to HECS

      This issue was actually covered in the recent Grattan Institute report into outstanding HECS-HELP debt. From the report (http://grattan.edu.au/publications/reports/post/doubtful-debt-the-rising-cost-of-student-loans/):
      "An alternative view is that there is no contract. The form students sign when taking out a HELP loan informs them of their statutory rights and obligations, not the terms of a contract. Like other statutory rights and obligations, these are subject to change. Although rule-of-law principles conflict with retrospective legislation, the Constitution does not prohibit it. In practice, HELP repayment rules have changed many times, without legal challenge." p.42

      Whilst this was in relation to changing the repayment terms for accumulated HECS-HELP debt, the theory should hold for changes to the indexation.

      tl;dr The government makes the rules, it can change them.

      If you're under contract for a interest free loan then they couldn't add it.

      I would think if there was any term where they could add it, it'd be considered onerous and so should have been brought to your attention to be valid.

    Makes me want to jump ship and work overseas while never paying back debt to this country run by criminals more than ever before.

      They should also amend the rules regarding jumpers like you and foreign students.
      No exit visas until the debt is paid off.

        Hey if they stick to what I signed up for, I have no problem paying it off. But if a generation that received free education think they can blatantly rip off future generations, then I don't want to help pay the wages of this scum.

        I didn't vote for them, and as Abbott and Hockey have repeatedly stated, they have no interest and feel no accountability to Australian citizens, only those who voted for them and donated to their party.

        Last edited 21/05/14 1:09 pm

    I'm in FEE HELP which is meant to be interest free. That's the same yeah? Otherwise I'm fucked because the debt is massive!

      I think you'll find that they are rolling all the programs in to one, so yes you are probably fucked if these changes make it past the Senate, and we don't have an election before Jan 1 2016 (although I wouldn't trust Labor to reverse this decision anyway as they are the ones who re-introduced fees in the 1990's)

    For anyone crying over this... go overseas and see if they willing to give you a government sponsored education on their budget. Off you go now and report back when you found out.

      Wow, we should aspire to be like countries that treat their citizens like shit! Lets scrap welfare and medicare altogether too, since you're hard pressed to find anything like that in many countries. Get some real class issues going like America!

      I was going to point out that of course no foreign government is going to pay for Australians to go to university, but then I remembered that for a while there the UK government was paying for the education of Australians in the UK on ancestry visas. Very patriotic of you to assume we have the most generous student support system though.

      Yes they will, go to Europe and find out for yourself.
      http://www.mastersportal.eu/articles/405/tuition-fees-at-universities-in-europe-overview-and-comparison.html

      For people not holding EU/EEA papers:
      Austria 600-1500 euro/year
      Denmark 6000-16000 euro/year
      Finland, in most cases free if you are out of luck it might cost you 2500 euro/year
      France 200-650 euro/year
      Germany, free in most cases (admin fee of 50-200 euro/year)
      Norway, free studies, free healthcare and free public transportation (semester fee 300-600 NOK)
      Spain, max of about 2000 euro/year, depends on level of study and where specifically
      Switzerland: 1000-4000 CHF
      Sweden: Free PhD studies, up to 15000 for everything else

      Go to Norway, learn Norwegian, travel around in Europe and have free studies and healthcare. how is that for a euro trip?

    I'm confused... as a current PhD student does this mean that I will be charged for my degree retrospectively or do the proposed fees apply just to new PhD students?

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