Amid a cost-of-living crisis, there is mounting demand from a group of MPs and advocates for the Australian government to swiftly reform the HECS-HELP repayment system.
Australians who have student debt will be subjected to the most significant increase in several decades, starting from June 1, 2023.
The Australian tertiary education sector will be hit hard as the federal government has announced the indexation on HECS student debts will increase by upwards of 7%.
The decision has upset students, education experts, and politicians, who say it will deter students from going to university and increase already high levels of student debt.
Finance Associate Professor Andrew Ainsworth said the increase in student loans could affect enrolment in university.
“If students are taking the indexation rate into account and it does stay persistently high, I think it will impact people’s decision to study,” A/Prof. Ainsworth said.
“You could perhaps just say “I won’t study at all,” or access other alternatives such as TAFE or a Trade.”
The indexation increase means students who take a HECS loan to pay their university fees will be charged a higher rate of interest, and their post-graduation debt will be higher.
High school graduate, Keeley Coates said the potential financial burden of university influenced her decision not to enrol.
“I thought to myself – what is the point in committing to a degree and the financial stress when I’m not one hundred per cent certain I want to pursue that career? This idea prompted me to pursue full-time work instead,” Ms Coates said.
“I would rather wait until I know what I want to do for sure, instead of having a lingering cloud of debt over me and not even using my degree.”
As debate continues, many have called on the government to reconsider the indexation decision and to take action to support young people who are trying to access higher education in an increasingly challenging economic climate.
A/Prof. Ainsworth explained a potential reason for the indexation of student loans was due to oil imports.
“Oil prices are what’s driven the increase in the inflation rate – to a certain extent, and then that flows through to fuel and any goods that are being transported,” he said.
“To index student debt to inflation that’s driven by oil prices – which is totally out of the control of anyone in Australia maybe isn’t the right basket of goods to index student debt against.”
He said, alongside the mounting cost of living and booming job market, the decision to increase indexation on HECS student debts is likely to have a significant impact on the future of Australian tertiary education.
“I think for students as well, you can think of your education as a cost – or an investment,” A/Prof. Ainsworth said.
“As a student, you’re investing in your education, which is all about your human capital, which you can gain a return on when you finish University and get a job.”
DID YOU KNOW…
That our HECS debts will increase on June 1?
I spoke with Associate Professor Andrew Ainsworth today who explained that OIL PRICES are (to an extent) a large reason why our student loans are going UP. 😵💫🤯
Higher education >>> OIL IMPORTS. #uowcreative #UOWTV pic.twitter.com/oc5pF4C4li
— Zara Koschitzke (@KoschitzkeZara) May 3, 2023