Mort­gage-scale stu­dent debt on the rise in Aus­tralia

THE (Times Higher Education) - - NEWS - John.ross@timeshigh­ere­d­u­ca­

The number of Aus­tralians with enor­mous stu­dent debts has in­creased by al­most 30 per cent in a year, adding im­pe­tus to the gov­ern­ment’s drive to rein in lend­ing.

The to­tal amount of out­stand­ing stu­dent debt reached A$54 bil­lion (£30 bil­lion) last June, up from less than A$48 bil­lion a year ear­lier, with more than 14,000 peo­ple ow­ing in ex­cess of A$100,000 – up from 11,000 in 2016.

The data, sum­marised in an Aus­tralian Parliamentary Li­brary re­port, sug­gest that thou­sands of grad­u­ates are strug­gling with huge debts. The A$100,000 fig­ure has be­come a by­word for un­af­ford­abil­ity, with the gov­ern­ment’s op­po­nents us­ing the spec­tre of “A$100,000 de­grees” to over­come its 2014 pro­posal to dereg­u­late univer­sity fees.

While the population of stu­dent debtors has risen by 70 per cent this decade, the number with A$100,000-plus debts has mul­ti­plied sev­en­fold.

Un­der a stu­dent loan sus­tain­abil­ity bill now be­fore par­lia­ment, bor­row­ers will start re­pay­ing their debts when their in­come reaches A$45,000 – down from the cur­rent A$55,874 – and will be pre­vented from ac­cu­mu­lat­ing debts of more than A$104,400 for study in most dis­ci­plines.

The new re­port cites es­ti­mates that 25 per cent of out­stand­ing debt will never be re­paid, although that fig­ure drops to 18 per cent if loans for vo­ca­tional train­ing are dis­re­garded. Another bill seeks to have the two groups of loans ad­mi­nis- tered sep­a­rately.

Ed­u­ca­tion min­is­ter Si­mon Birm­ing­ham said that Aus­tralia had one of the most gen­er­ous stu­dent loan schemes in the world, but it was “de­signed with the ex­pec­ta­tion that a small pro­por­tion of stu­dents wouldn’t be able to re­pay their loans”.

“With around A$50 bil­lion of out­stand­ing debt and around a quar­ter not ex­pected to be re­paid at the mo­ment, it’s clear the cur­rent situation can­not con­tinue,” he said.

The Coun­cil of Aus­tralian Post­grad­u­ate As­so­ci­a­tions said that “pe­nal­is­ing stu­dents for the cost of their ed­u­ca­tion” was a short-sighted re­sponse to the prob­lem. “Im­pos­ing a loan bal­ance cap does not ad­dress the real prob­lems of bal­loon­ing tu­ition fees and grad­u­ates’ dif­fi­cul­ties find­ing sta­ble, fairly paid em­ploy­ment,” said na­tional pres­i­dent Natasha Abra­hams.

“If the min­is­ter is gen­uinely con­cerned that some stu­dents are un­able to pay back their loans, it would be pru­dent to ex­am­ine and ad­dress the rea­sons for this rather than dev­as­tate op­por­tu­nity for fu­ture stu­dents and rip money from lower-earn­ing grad­u­ates.”

While stu­dent groups bit­terly op­pose the changes, some univer­sity strate­gists pri­vately hope that they pass par­lia­ment, rea­son­ing that, if they are blocked, the gov­ern­ment may in­tro­duce more oner­ous changes in­stead. Ad­vo­cates ar­gue that the A$45,000 thresh­old will not hurt low- in­come grad­u­ates too much, because the re­pay­ment rate for those earn­ing un­der about A$55,000 will only be 1 to 2 per cent of salary. They also say that the im­pact of the bor­row­ing cap has been soft­ened by an amend­ment that makes it “re­plen­ish­able”, with stu­dents able to con­tinue bor­row­ing af­ter pay­ing down enough of their debts to keep the out­stand­ing amounts un­der the cap.

But Ms Abra­hams ar­gued against ac­cept­ing “flawed” changes for fear of in­cur­ring “yet another cut”. She said that the gov­ern­ment had al­ready made sub­stan­tial sav­ings by freez­ing teach­ing grants late last year.

The sus­tain­abil­ity bill passed the House of Rep­re­sen­ta­tives in March and has been in­tro­duced into the Se­nate, where it will need the back­ing of nine of the 11 mi­nor party and in­de­pen­dent sen­a­tors.

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