University Course Fees Face Dramatic Restructure: Young People at Risk Again

July 2020

Key Points

  1. Following the Federal Government's announced changes to higher education course fees, some students will now have to repay debts over $85,000 to complete a tertiary education degree.
  2. It is unlikely this policy change will have the desired effect of encouraging students to study ‘desirable’ degrees. Instead, most students base their decision on a myriad of more visible factors.
  3. The average number of years it takes a student to repay their HELP debt has increased from 7.6 years in 2007-08 to 9.08 in 2017-18, an increase in time of almost 20%
  4. This policy change is a huge hit to the disposable income of many young people who have already been significantly impacted by the economic downturn caused by COVID-19. Young people need more, not less, support from the Government.

On June 19, the Federal Government announced changes to higher education degrees with course fees set to radically change. Whilst the cost of some degrees like maths and agriculture will reduce by 62 per cent, the cost of other degrees, mainly in the humanities, is set to rise. Law and commerce degrees will now increase by 29 percent, and arts and communications courses will more than double.

In anticipation of backlash against the fee increases, the Federal Education Minister, Dan Tehan, declared that “This does not mean fee deregulation. This does not mean $100,000 degrees.”[1] However, calculations made in this article have found that law students, who are often mandated by universities to combine their degree with another degree, will now have to fork out over $85,000 to complete a five-year law degree.

1. Students Saddled with Debt

The table below highlights how much each degree will now cost, and the total size of the Higher Education Loan Program debt:

2. Fees Changes will not Alter Degree Preferences

The debate surrounding these fee changes has centred on the merits of the humanities. Equally relevant is whether this change will actually discourage potential students from these high-cost studies.

The media attention on the fee changes might impact some students graduating in 2020 who are selecting their course preferences for 2021, however, it is unlikely that this will always be the case. Most high school students are not familiar with the cost of university degrees. After all, the HELP system places one’s student debt largely out of sight and out of mind. Individuals are not mandated to start repaying their HELP debt until they start earning an annual salary above $45,881.[2]

It is unlikely this policy change will have the desired effect of encouraging more students into ‘desirable’ degrees like maths and agriculture. Instead, most students will continue to base their decision on a myriad of more visible factors including personal interest in the subject area, familial opinions, decisions of peers, and open day presentations.

While the size of student debt is obviously a deciding factor in some individual’s decision to study, for the vast majority of students who elect to place their debts on the HELP system, it is a factor unlikely to overpower personal passions or existing goals.

3. Impact on Debt Repayment

The latest government data on HELP indicates that for 2017-18, outstanding HELP debt rose from $54b to almost $62b across Australia.[3] The graph below shows that the average number of years it takes a student to repay their HELP debt has increased from 7.6 years in 2007-08 to 9.08 in 2017-18, an increase in time of almost 20%.

These proposed changes will further exacerbate the amount of debt some students will have to repay once they begin work, reducing the disposable income available for young people.

The impact on the disposable income of graduated students will be most pronounced for those who use the HELP system because their parents could not afford to pay their university education up-front.

4. A Fees Restructure is not the Solution in a Recession

As Australia faces our first recession in nearly three decades, the Government should be doing everything in its power to stimulate the economy. Moreover, the Government has indicated there will be budget repair measures in the years to come after this pandemic, whereby young people will likely bear the brunt of potential austerity measures.

Young people, who have been disproportionately impacted by the economic ramifications of COVID-19, need more, not less, support from the Government.

Policy changes designed to increase the maths literacy of students should focus on the education curriculum within our primary and high schools, rather than through a misguided course fee restructure that will leave students saddled with more debt. Whilst lowering the cost of courses in degrees like teaching and nursing is a welcome change, this should not come at the expense of other important industries in society.

Potential students preparing to take the first steps of their careers through university are generally more concerned with discovering their passions and exploring their interests than the HELP debt that will need to be repaid in decades to come.

We should let our young people have this chance of exploration.

*Changes have been made to the original article published. The original version contained tables regarding differences in annual repayment, however, these tables have now been removed as a data interpretation error was identified.

[1] Minister for Education Dan Tehan National Press Club address

[2] Study Assist | Loan Repayment

[3] APH Library | Updated Higher Education Loan Program (HELP) debt statistics—2017–18

[4] The pandemic’s hit to young workers wages | On Mornings with Ali Moore