Late last month, the Labor federal government voted down Greens’ Senator Mehreen Faruqi’s proposal, the Abolishing Indexation and Raising the Minimum Repayment Income for Education and Training Loans Bill. The Senate committee hearing that preceded the vote brought to light overlooked facts about the HECS system.
“Rising student debt is impacting people’s mental health, causing young people to rethink further study and making it harder for them to access personal loans,” Dr Faruqi said. “[It] will further entrench inequality, with women and young people…bearing the brunt.”
Faruqi has a doctorate in environmental engineering and a master’s in civil engineering.
The Senate heard that nurses and primary-school teachers are the professions making the highest total amount of HECS repayments over the lifetime of their debts. This is because the lower salaries of these jobs leaves graduates paying off the student debts for longer, and also because the debts continue to compound while women, who make up a majority of these professions, are out of the workforce raising children.
More than half of all university graduates still have a HECS debt at age 40. Three fifths said HECS debts were harming their ability to buy a house and one third said they were delaying having children because of it.
Advocacy group Public Universities Australia (PUA) said that years of tweaking have altered the loan scheme so profoundly “that it no longer functions in the manner originally intended.” Original discussions intended the debts to only be paid off when graduates were earning “a comfortable income.”
Under the Turnbull government the repayment threshold was lowered to $48,000, before being raised to $51,550 yesterday. Once an earner passes that income, HECS is levied on the entire salary, rather than the marginal amount. The Greens want the threshold raised a further $13,000 to the level of the median wage.
Meanwhile, the National Union of Students (NUS) argues the government is in a sense profiting by an average of $670 per student this financial year. That’s based on the difference between the Reserve Bank cash rate and the rate at which HECS essentially loans money to students.
Nonetheless, the ALP voted based on a submission from the federal Department of Education, in conjunction with Employment and Workplace Relations. Their policy analysts argued Faruqi’s policy has the potential to be “regressive,” because shifting the burden of payments away from graduates, it said, would amount to taxpayers without a degree subsidising those with degrees.
Images courtesy of @miteneva via Unsplash.
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