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Graduates could pay up to $120,000 in debt, HECS architect warns

Date

Matthew Knott, Heath Gilmore

"Fees will go up and they will go up quite significantly": Bruce Chapman.

"Fees will go up and they will go up quite significantly": Bruce Chapman. Photo: Glenn Hunt

University degrees will cost up to three times as much under a deregulated fee system, leaving graduates with $120,000-plus debts, according to the architect of the HECS student loan scheme.

Bruce Chapman, regarded as one of Australia's leading education economists, also warned that increasing the interest rate for student debts would hit poor graduates and women the hardest.

'Fees will go up and they will go up quite significantly.': Bruce Chapman.

'Fees will go up and they will go up quite significantly.': Bruce Chapman. Photo: Glenn Hunt

The federal government announced in the budget on Tuesday that universities will be able to set their own course fees from 2016 and real interest will be applied to student debts for the first time.

''Fees will go up and they will go up quite significantly,'' Professor Chapman, director of policy impact at the Australian National University, said.

''I expect most universities will increase tuition fees to international student fee levels, which are currently about three times higher. The Group of Eight universities will do that pretty quickly.

''Past changes to HECS didn't deter students from entering university, but now that there will be a real rate of interest on the debt we are in uncharted waters.''

Professor Chapman said it was plausible the cost of a bachelor of medical science would rise from $24,000 to $120,000 – the fee for international students at the University of Sydney.

''The idea fees will go down anywhere is frankly fantasy land,'' he said.

Professor Chapman said the government's plan for students to pay interest on loans up to 6 per cent - depending on the government bond rate - was unfair. Students who drop out of university and start out in low-paying jobs would be the hardest hit, he said. So would women who delay paying back their debts when they take time off work after having children.

Interest on student debt has been pegged to inflation – now 2.9 per cent – since the introduction of HECS.

A $40,000 debt unpaid for 10 years would grow to $58,933 at an interest rate of 4.4 per cent.

Universities Australia chief executive Belinda Robinson said: ''We will definitely see a major shake-up of the sector with some universities charging substantially higher degrees for some courses.''

Ms Robinson said she was concerned dramatic increases in fees could deter students from entering university, throwing the viability of some universities into doubt.

Fee deregulation has split the university sector, with sandstone universities strongly in favour while many technical and suburban universities are opposed to the policy.

University of Western Sydney vice-chancellor Barney Glover said he was concerned fee deregulation would hurt the economic development of western Sydney.

''UWS is particularly concerned that this will place additional financial burdens on students, and it will be important to determine if this acts as a deterrent to university study,'' he said.

''This could have further implications for national productivity and regional development at a time when Australia and western Sydney face considerable economic and labour market challenges.''

Chairman of the Group of Eight universities Ian Young said the government's other major higher education initiative – the extension of Commonwealth support to TAFEs and private colleges – will place downward pressure on fees.

''If universities want to charge a premium, they will have to convince students there is a real benefit to what they offer,'' he said. "This will keep us on our toes and force us to innovate."

The requirement for universities to spend 20 per cent of extra fee revenue on scholarships for low-income students addresses equity concerns, he said.

Education Minister Christopher Pyne said increased fees are justified by the higher salaries university graduates earn. 

''The prices might go up or they might go down through competition,'' he told Sky News on Wednesday.

''People might be surprised how much effect competition has on reducing prices. Let's see how the market reacts from 2016 onwards.''

University of NSW acting vice-chancellor Iain Martin said fee deregulation was essential and the alternative would have led to an ''inevitable decline in the international reputation of our universities''.

Grattan Institute higher education program director Andrew Norton said fees will increase but claims of $30,000 annual fees becoming the norm were overblown.

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376 comments

  • Watch online education take off.

    Commenter
    Rob - Sydney
    Date and time
    May 15, 2014, 7:18AM
    • Yes online education will be more popular. Maybe we can move the Parliament to an online situation. The MPs could then work part time for half the wages. Just remember anything the Govt pushes through can be reversed under the next Govt. The whole system need tighter laws to prevent political parties from waiting until this week to release their real policies.

      Commenter
      Rod
      Location
      the Coast
      Date and time
      May 15, 2014, 7:54AM
    • It's all about supply & demand.
      If you can't afford it you won't go. And if too many decide they can't afford it, the uni's either have to cut prices or risk closing down due to lack of customers.

      Commenter
      Scotty
      Date and time
      May 15, 2014, 9:12AM
    • Online education with a severely limited NBN ?

      Commenter
      adam
      Location
      yarrawonga
      Date and time
      May 15, 2014, 9:18AM
    • Do we really want the US style education or health system?

      Both cost 300% more than the equivalent in Australia or Canada and give much worse results.

      For example life span in the US is among the lowest in the developed world whereas Australia has one of the highest.

      Moves to change are all about profiteering.

      Commenter
      Good Logic
      Date and time
      May 15, 2014, 9:18AM
    • You know what would help that? The NBN would help that. Oh, they got rid of that.

      Commenter
      apples
      Location
      Melbourne
      Date and time
      May 15, 2014, 9:30AM
    • I invite you to contrast the headline with the article's content and reflect on the concept of trust.

      Headline "Want a uni degree? That'll be $120,000"

      Contrary to the headline, the suggestion is only that a MEDICINE degree at a top 2 university might cost $120,000. And that is just one guy's OPINION.

      Wilful misrepresentation of facts underscores the need to diversify ones reading sources.

      Commenter
      Gatsby
      Date and time
      May 15, 2014, 9:53AM
    • Students can borrow 100% of the cost at a cheap interest rate - so no poor student will miss out.
      Let alone all the scholarships targetting disadvantaged.
      The Doctor will probably earn $3-400k+ pa for the rest of his life. How much should bricklayers subsidise his education?

      Commenter
      Gatsby
      Date and time
      May 15, 2014, 9:54AM
    • Rather… watch the non-university degree providers take off who have coincidentally been scrambling to build bricks & mortar premises all over the country in the past 6 months. As if they knew this announcement was coming.

      Commenter
      Peter
      Date and time
      May 15, 2014, 9:54AM
    • This is a typical neocon far right wing ploy too......the cost will turn the young away from uni degrees and therefore the higher un educated the population the more easily fooled and tricked they are when elections come around....one of the oldest neocon tricks.

      Commenter
      JT
      Date and time
      May 15, 2014, 10:05AM

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