Australia’s Higher Education System Grasping for Funding Streams

Australia’s Federal Education Minister Christopher Pyne is suggesting that in order to recoup outstanding Higher Education Contribution Scheme (HECS) debts, the government might consider collecting the debts from the estates of deceased students.

HECS, Australia’s version of college loans, allows students to have money loaned to them for college and university tuition and are only required to pay a part of the loan back, called the “student contribution”.  An example used to explain reasoning behind this idea, says Matthew Knott, reporting for The Sydney Morning Herald, is that when an elderly person passes away, the mortgage to the family home is still required to be paid back to the bank. As of now, HECS debts are not required to be paid back if a student dies.

It is not the intent of the government to cause harm to the deceased student’s family.  And, no one is denying that this move could appear to be callus to some, but it could be a plus since each of Australia’s three parties are opposed to deregulating university fees and increasing the interest rates on HECS debts.

The Grattan Institute, an Australian think tank, predicts that the proposed move could save up to $800 million annually.  This means that 80,000 people with outstanding student loans, would have to die in the next three years.  The revenue from the plan would also include collecting from the 400,000 Australians who live overseas.

Labor higher education spokesman Kim Carr had a different name for the tax:

“The government is grasping for a distraction to its policies,” he said. “This would cut to the core of HECS by introducing a ‘death tax’ that may cost more to administer than it would raise in revenue. The idea of HECS is you only repay it when you are earning above the threshold.”

Pyne said during a recent television interview that students could borrow from the taxpayer and the loan does not have to be repaid until they are earning $50,000 a year.

Professor Les Field, deputy vice-chancellor at the University of New South Wales, is worried about these changes, believing the infrastructure of universities is one big expense looming on the horizon.  Field is concerned that a $20 million medical research fund will be raided  In 2016, universities will be allowed to decide on their own fees.  Government loans also will have higher interest rates.

Prime Minister Tony Abbott told reporters, “We have no plans to change those debt recovery arrangements.”  Interestingly, says Wendy Syfret, writing for Vice News, most of Australia’s parliament graduated from their institutions of education back in the Whitlam golden age of no university tuition. (Edward Whitlam was the 21st Prime Minister of Australia, serving from 1972-1975.)

Vice-Chancellor Glyn Davis of Melbourne University says that student fees will have to be raised up to 61% in some courses to manage the government budget cuts to schools and universities.  Michelle See-Tho, of The Age, writes that many disciplines will have their funding cut dramatically.  Two that will not suffer cuts are mathematics and humanities.  Davis had some advice for his staff:

He told staff that they should “urge the Government to moderate the interest rate imposed on student debt and reconsider deep cuts caused by the change in funding clusters. Everyone on campus, student and staff member alike, understands we are now entering an unprecedented era in higher education. There are challenging issues involved in setting fees that cover the real costs of university education, yet minimise debt levels for the next generation,” he said.

Schools can decide when they want to apply the deregulation status to their fees and have until 2016 to make this decision.