Young people feel short-changed, and student debt is a key reason why
These fees amount to around $17,000 per year of study.
The income-contingent philosophy underpinning HECS was designed for students to begin repaying their debts when taxable income reached average weekly earnings.
Today students start repaying at a threshold barely over half of that amount.
Initially, the additional tax to recoup loans progressed from 1 to 3 per cent depending upon income. It now ranges from an additional 1 per cent to 10 per cent on top of graduates’ marginal tax rates.
For someone on average weekly earnings, this means an additional 6 per cent.
Much of the higher cost burden falling on students is due to the Job-Ready Graduates Package, announced in 2020 by then-Liberal education minister Dan Tehan.
Loading
While the package lowered students’ share of costs in some courses, it saw sharp increases in others. For example, humanities student fees more than doubled, rising by 113 per cent.
Why? Well, as Tehan explained in his address to the National Press Club, the changes aimed to “incentivise students to make more job-relevant choices, that lead to more job-ready graduates, by reducing the student contribution in areas of expected employment growth and demand”.
Teaching, nursing, agriculture, and STEM (science, technology, engineering and mathematics) were singled out as fields in growing demand.
But data and research have shown the assumptions underpinning the policy are false.
Census data reveals that recent graduates with degrees in society and culture, as well as commerce – fields hit with the highest student fees – have better employment outcomes than STEM graduates.
Our modelling also shows that while demand for health and IT qualifications is growing, demand for STEM skills overall is not increasing at the rate anticipated.
Over the past 15 years, it has been outstripped by demand for qualifications in society and culture fields.
Student enrolment patterns have not responded to the differentiation in fees. Economists predicted exactly that given students don’t need to start paying until well into the future.
Agriculture, environment and related studies, billed as a growth area and attracting the lowest student contribution of just 13 per cent of course costs, has seen declining enrolments, the slowest growth in qualifications demand, and, at best, modest graduate outcomes.
The government’s pledge, if re-elected, to arbitrarily wipe 20 per cent of student debts could be seen as an admission that the burden on students has become unfair under the current system, but fails to address the flawed elements of that system.
Key aspects of the Job-Ready Graduates Package are pointlessly stifling the educational aspirations of many young Australians under a mound of debt and based on a swathe of false assumptions.
The upcoming federal election is shaping up as a close contest and young people’s votes could well determine the outcome.
Housing affordability is difficult to tackle. The cost of university is not. Young Australians should demand pledges for a fairer deal from both major parties.
