Budget 2017: How Students Are Getting Slugged

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The Coalition government is seeking savings of A$2.8 billion from higher education over the budget period, in another attempt at a major shake-up of Australia’s university sector. The cost burden on students will be increased and the income threshold for repaying their debt lowered. .

The average student share of fees will increase from 42 per cent to 46 per cent, with the average share paid by the government consequently falling from 58 per cent to 54 per cent.

The increase will be phased in, with a 1.8 per cent rise each year from 2018 to 2021, cumulating to a 7.5 per cent increase. Birmingham describes the extra impost on students as “marginal”.

This will mean increases in student fees over a four-year course ranging from $2000 to $3600.

The most a student will pay for a four-year Commonwealth-supported course will be $50,000. The maximum student fee for a six-year medical degree will be $75,000.

From July next year people will have to start paying back HELP loans when their income reaches $42,000. The current threshold is just under $55,000. Under last year’s Omnibus Act, it was set to go down to about $52,000 in 2018-19.

Birmingham said outstanding taxpayer-funded student loans had tripled since 2009 to more than $52 billion, and without changes one-quarter of that was expected to be unpaid.

A 2.5 per cent efficiency dividend will be imposed on Commonwealth Grant Scheme payments to universities in each of 2018 and 2019.

The Coalition’s higher education policy has been in limbo since the Abbott government’s 2014 plan, containing a 20 per cent funding cut for universities and fee deregulation, could not be passed through the Senate. That plan was announced in the budget – in contrast, the government this time is unveiling its changes before the budget, hoping that will make for a better sales job.

Birmingham is using a Deloitte report commissioned by the government to argue the sector is in a good financial position to bear the changes, saying it showed that between 2010 and 2015 the average costs per student increased by 9.5 per cent, while funding to universities grew by 15 per cent.

But Universities Australia said the report’s authors themselves cautioned that it could not be used to compare costs over time.

Speaking to an audience of university, business and student representatives, Birmingham said the reforms were “fair, reasonable and necessary”. The government gave “a guarantee that no student will pay a cent upfront for their higher education, students will no longer face fee deregulation and universities will not face a 20 per cent cut to their funding”.

“When considered against total Commonwealth government payments of $74 billion to universities over the next four years, the impact of this $2.8 billion reform package is less than four per cent of the revenues to universities from taxpayers and students,” Birmingham said.

Loan repayments at the $42,000 threshold would be at a 1 per cent rate; a new maximum threshold of $119,882 would have a 10 per cent repayment rate. From July 2019, the thresholds would be indexed to the CPI, rather than average weekly earnings.

Birmingham said the new minimum repayment threshold was 20 per cent above the full-time minimum wage. “At a repayment rate of just 1 per cent an employee will pay back just $8 per week of the student loan.” The proposal was “fair, measured and modest”, he said.

The government will make part of university funding contingent on performance in certain areas. From January, 7.5 per cent of a university’s Commonwealth Grant Scheme funding will depend on meeting requirements on admissions and financial transparency. From 2019 there will be requirements on student retention and success.

Birmingham also said the present system, with Commonwealth funding for sub-bachelor and post-graduate places had acted as a handbrake on innovation in courses.

From January, “public universities will be able to enrol students in a demand-driven, Commonwealth-supported place in sub-bachelor level diplomas, advanced diplomas and associate degree courses.

"This reform recognises the flexibility that shorter sub-bachelor courses have in meeting workforce demand. It will also allow more industry input to curriculum design to improve the job readiness of graduates.”

There will be funds towards “work experience in industry” units that are credited towards a Commonwealth-supported qualification.

“Study which is integrated with industry has significant benefits for the job readiness of graduates,” Birmingham said.


The Conversation

Michelle Grattan, Professorial Fellow, University of Canberra

This article was originally published on The Conversation.


Comments

    And yet, nothing about how some get a degree on HECS-HELP, then move over seas thus don't have to pay the load back even if they are earning enough to embarrass a Texas oil tycoon.

    Maybe if money was so tight, they look at that old and frequently used loop hole.

      HECS-HELP goes away this July 1. https://www.ato.gov.au/Individuals/Study-and-training-support-loans/Bonuses,-benefits-and-discounts/

      I remember when wealthy parents rorted TEAS (prior to HECS), so that they appeared to have no income and their kids could get full Commonwealth subsidies. For those who come from rural areas, where the cost of living in a city is an impossible overhead for parent, I imagine tertiary participation will fall further. Which I guess will cheer up Barnaby Joyce no end.

      Last edited 02/05/17 1:24 pm

        Your source indicates that the benefits - means to reduce the size of the loan - go away.

        The HELP program is not going anywhere.

        But $5 says the loop holes are still here and are unchanged.

    I think you meant to write "a major shake-down of Australia’s university sector."

    “Study which is integrated with industry has significant benefits for the job readiness of graduates,” Birmingham said. "So we're sending everyone to work in overseas call-centres".

    But there is a pattern isn't there?

    Cut penalties to people on low wages.
    Go after welfare of the most vulnerable people
    Cut medicare.. for sick people
    Cut uni funding and increase student fees

    Then give a tax cut the big business, that already know how to exploit the loop holes to pay minimal tax.

    This government is criminal.

      Like all things in life there is always nuance. Thinking in black and white terms is just idealogical / political bullshit.

      Cutting penalties rates is wrong, if you don't increase the general base rate. But, cutting penalty rates can work.

      Welfare is a major ticket item that is abused by some people and should be trimmed and recalibrated with other mechanisms of increasing an economy.

      Cut medicare - our health policy in general is a disaster. Eg. intervening in chronic diseases caused by personal abuse (eg. a persons gets obese and then expecting everyone else to pay $100,000s of dollars for their care)

      Australian unis need to provide better education standards which isn't a simple thing of needing more money .. they need restructuring. I'm currently doing a post grad work through one of top unis and the educational standard is really poor.

      Businesses need to be encouraged to invest here - tax cuts can work in that environment as you expand the driver of your money base - business. Your money base doesn't come out of a fairy's ass.

      All political parties in the current environment are having to work with a society of people not willing to make actually smart and hard decisions. We are getting political parties that reflect our own shallowness.

        Education standards drop to accommodate fee-paying international students. It's amazing what is tolerated to continue getting $$$ from students who don't meet standards of literacy, behaviour or academic competence.

        Shallowness, there is no shallowness in being a politician earning an obscene wage for doing an ordinary job and no on-the-spot dismissal for making costly mistakes.
        There is no shallowness in their deep bank accounts when they retire on a $$$$multi-thousand pension even when they are a failure, liar, cheat as seen in the recent past.
        The majority of Aussies are not shallow, they deserve a respectable pension when they retire, they deserve to see their children have access to free education, education to learn skills other than button-pushing on a computer.
        Most Aussies are loyal to Australia, when are politicians going to be loyal to Aussies because a certain race of people receive more benefits for staying at home than Aussies receive for working hard at a job for most of their lives, no 5 more years have been added to retirement age, but not for politicians.

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