Opinion
Until Labor arrests the ballooning cost of uni, students are still being short-changed
Rachel Withers
ContributorCredit where it’s due. The Albanese government’s changes to HECS/HELP debt indexation – long called for by students, Greens and independents, and recommended in February by its own review – are welcome, especially among those facing creeping higher education balances.
The reforms, which were announced on Sunday, will see indexation tied to whichever is lower of the consumer price index and the wage price index, preventing another spike like last year’s, when debts rose 7.1 per cent, and which saw many graduates’ debts rise by more than what they had repaid.
Prime Minister Anthony Albanese and Minister for Education Jason Clare.Credit: Alex Ellinghausen
What’s more, the changes will be backdated, meaning 2023’s mega-rise will be cut down to the lower figure of 3.2 per cent, “wiping” $3 billion off student debt nationwide.
Labor aren’t the only ones who want credit for this, as they eagerly post the $3 billion figure to their social media accounts. Independent MP Monique Ryan is heralding the power of community, after her petition demanding the government make HECS “easier to pay off” received over 288,000 signatures. The Greens, too, would like some rightful credit, after putting forward a bill to freeze student debt in November 2022, and consistently arguing for indexation to be abolished.
But just how much credit is this change really worth?
We could quibble with the fact we’re still waiting on changes to indexation timing, which currently fails to take into account repayments made throughout the year — another crucial reform recommended by the Universities Accord review, which may be announced in the coming days.
One could also question how much difference this will make in the average year, considering CPI is usually lower than WPI, or the fact it doesn’t affect repayments, meaning the impact on current cost-of-living pressures will be all but nil.
A cynical observer might note that the $3 billion being “wiped” from debt is simply returning an unfair increase that should have been stopped before it occurred.
Ultimately, however, the most glaring issue with the announcement is that it does nothing to address the unsustainable levels of debt with which today’s graduates are leaving university.
Students are expected to carry an increasing share of increasingly expensive university degrees, with debts unimaginable even to those who graduated under the HECS system 20 years ago. According to analysis from the Australia Institute, the average HECS debt of someone in their 20s has risen 145 per cent since 2005-06, compared to an inflation rate of just 57 per cent over the same period, now sitting at over $30,000. “HECS/HELP no longer operates as it was supposed to,” the Institute’s chief economist Greg Jericho and researcher Jack Thrower write, noting that debts being taken on are “far greater than was intended when HECS was introduced”.
Sadly, these figures are only set to worsen under the Morrison government’s 2021 “Job-ready Graduates” changes, which has sent the cost of humanities degrees soaring, while having little impact on enrolment decisions. Last year’s National Tertiary Education Union report on the future of graduate debt found that average repayment periods for certain degrees could exceed 40 years under the current settings, with total repayment amounts to exceed $100,000 for many four-year degrees.
It remains to be seen how much difference a sometimes-reduced rate of indexation is going to make to future graduates carrying tens of thousands of dollars in debt. Certainly, some. But the root of the problem remains the size of the debt, and the fact today’s graduates are expected to spend half their lives paying it off.
The government is certainly aware of this problem. The Universities Accord review recommended a reversal of many of the fee increases introduced under the Jobs-ready scheme, suggesting instead that student fees be based on “potential lifetime earnings”.
Education Minister Jason Clare has indicated that further changes will be coming out of the report, announcing a $300 a week payment for certain students undertaking critical placements. But until the ballooning cost of going to university is arrested, future generations are once again being short-changed, with intergenerational inequality hitting on multiple fronts.
As with many such fixes, the government’s lofty rhetoric over its indexation change far surpasses what is actually being done here.
“Uni should create opportunities for you, not a lifetime of debt,” Prime Minister Anthony Albanese wrote following the announcement, as he boasted that last year’s indexation of 7.1 per cent was being somewhat reduced.
Unfortunately for many current and future students, a lifetime of debt is exactly what they are facing, regardless of whether that debt sentence is pegged to wages or inflation.
Rachel Withers is a freelance writer based in Melbourne.
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