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Action on HE Debt Will Also Help Private Providers

As outlined in The Australian newspaper’s astute and insightful March 30 editorial Time to act on tertiary debt (http://www.theaustralian.com.au/opinion/editorials/time-to-act-on-tertiary-debt/news-story/a45c9fc8aa4204baa091edf348ed13c8), a curb on growth in the HE loan program’s outstanding debt which is now $42.3 billion is critical. COPHE members expectation of equality of treatment of our students is highly unlikely whilst the current system is unsustainable.

 COPHE supports the editorial’s call for the latest road map for tertiary education debt repair to be taken seriously. This road map provided by the Grattan Institute’s Andrew Norton in HELP for the future: fairer repayment of student debt, March 28. http://grattan.edu.au/report/help-for-the-future/, the recommendations make sense from a fiscal and equity perspective, and are based on solid analysis and extensive data.

HELP loans to students doubled between 2010/11 and 2014/15 to a total of $7.8 billion and by mid-2015, $42 billion of HELP debt was outstanding against $23 billion in 2010. The introduction of VET FEE HELP is a major factor. The Government is already carrying forward a $4.5 billion higher education saving that has not been realized in the Budget papers from 2015-16.

 Whilst the Grattan report focuses on one critical element in the loan scheme, a range of measures, including repayment from deceased estates and loan administration fees, is needed to more comprehensively rein in the expanding costs. In line with COPHE’s  pursuit of equity in the treatment of students, our overall goal is a single income contingent loan scheme with consistent rules for all students, not the discrimination our students currently face.

Extension of HECS places and elimination of the 25% admin fee, important equity measures though they may be, are nevertheless unlikely without savings. The report predicts implementation of its proposed reforms would increase repayments by an initial $500 million a year and more over time.

In Chapter 6, Norton’s report proposes a lower initial HELP threshold of $42,000 in 2016-17 rather than nearly $55,000 under current policy. Using 2013-14 tax statistics, nearly 50 per cent more debtors would start to repay under the lower threshold. This report also recommends a three per cent first repayment rate instead of the current four per cent. Andrew Norton in many ways is expanding on ideas in a report last year for the Mitchell Institute at VU by Professors Bruce Chapman and Tim Higgins at ANU. It considered repayment thresholds and projected repayment challenges, particularly for VET students.

When immersed in the detail of this report, one is reminded of the inequity in the current treatment of non-public university students. COPHE’s position remains that we need policy which puts students first – which secures equity, expands choice and drives diversity. HESA support is about support of students, not preservation of a particular type of institution.

The Government’s agenda for change, as outlined in Education Minister Simon Birmingham’s recent speech to the Universities Australia conference, shows the economic realism that holds hope in the long term for our members. However the clear need for budgetary restraint indicates any form of Government financial support for our students at this stage is unlikely.

Meanwhile, as extrapolated well in The Australian newspaper’s editorial of March 11, Higher education on the edge (http://www.theaustralian.com.au/opinion/editorials/higher-education-on-the-edge/news-story/eb653a405b530d747a7446177b72b622), Labor continues to follow an idealist agenda over pragmatic solutions. It is interesting to read that “it is high time the government cut the apron strings and encouraged university autonomy as more than mere philosophy. It must flourish as economic reality.”

In the long term, all institutions, and even more importantly all students, will benefit from a more sustainable system.

- Adrian McComb, CEO COPHE

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