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Higher Education Mustn't Mean a Second Mortgage

We have with our current HECS/HELP scheme one of the best and fairest higher education systems in the world. We tamper with it at our peril says Senator Kim Carr, Shadow Minister for Higher Education, Research, Innovation and Industry.

At about the same time Tony Abbott began his visit to the United States, a US congresswoman issued a grim assessment. 

“Young people can’t buy homes, can’t start small businesses, can’t buy cars, can’t take the economic steps that are not just good for themselves individually but good for the economy overall.”

Why not? Student debt, said Senator Elizabeth Warren.

“Student loan debt is dragging down the whole economy,” she said. And it is, too, to the tune of $US1.2 trillion. 

For ordinary American families, the cost of a college degree can mean having to take out a second mortgage to pay for student loans. It may also involve choosing which kid to help when you simply cannot afford to pay for more than one.

Back home, Education Minister Christopher Pyne has been spruiking the benefits, as he sees it, of a deregulated system like that of the US. 

All will be well, he assures those who fear the $100,000 degree and crushing debt burden that could take years to pay off.

Nothing to worry about. Competition will keep fees in check. No one will be able to get too far ahead because they will be brought back into line by market forces. And you don’t have to pay a cent upfront. Never mind the day when you do. You’re going to earn scads anyway.

That simplistic scenario – entirely at odd with the US experience – has not gone down well; Australians recognise a dodgy deal when they see one. 

And, as Mr Pyne is now discovering – having not done his homework beforehand – his extreme changes to the higher education sector require a lot more thought than he has given them. He’s now had to appoint two expert working groups to sort out the mess, presumably at considerable additional public expense.

Yet before the election the Abbott team had promised: “We will ensure the continuation of the current arrangements of university funding.”  The Education Minister was blithely promising only seven months ago that “the education budget as forecast over the next four years will not be cut by the Coalition . . . we want university students to make their contribution. But we're not going to raise fees.”

Imagine the surprise all round then when just five months later, the Abbott Government’s first budget cut $5 billion from university funding, resulting in forecasts of fee rises of 40 to 60 per cent just to recoup the shortfall; imposed a real interest rate of up to 6 per cent on debts; and deregulated universities, making it inevitable that fees would rise even further – in short, as the Education Minister himself likes to say, the biggest changes to higher education in 30 years. 

None of that was canvassed with voters before the election, and it wasn’t much discussed with the university sector either. Those who had been agitating for fee deregulation (the Group of Eight or sandstone universities) now find themselves joining with the rest of Australia’s 39 universities in expressing surprise and dismay at what’s been foisted on them. 

As Warren Bebbington, vice-chancellor of Adelaide University and a leading proponent of deregulation, put it, “It is starting to look as if the student debt burden for many under the proposed reforms might well be worse than in the US. Deregulation would become misregulation.”  

Another called it “the worse piece of public policy” he had seen in his 26 years in Australia. It was, said the vice-chancellor of the University of Canberra, Stephen Parker, “unfair, unethical, reckless, poor economic policy, contrary to the international evidence and being woefully explained, raising suspicions about how much thought has actually gone into them”.

We have with our current HECS/HELP scheme one of the best and fairest higher education systems in the world. We tamper with it at our peril.

It would be unconscionable for those of us who enjoyed access to an affordable university education to be remembered as the generation that destroyed the Australian dream of the fair go for our young people and the hopes of parents for their children. Let us not, as has happened in the United States, become the land of the second mortgage.

This article was first published in the Herald Sun on Monday, 23 June 2014.

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