In 2014, Federal Education Minister, Christopher Pyne started planning reforms to Australia’s funding of university education, including the deregulation of university fees and the end of interest free loans for students.
Like Minister Pyne, I benefited from a free university education, fully funded by the tax system, so I find his idea troubling.
I preferred things the way they were in the 1980s, where tertiary education was still regarded as a common good. Sure, individuals would benefit from the careers it would open up to them, but society would also benefit from having a well-educated population. It was a great equalizer. No fees, allowed people who could not otherwise afford it, to access higher education. Requiring people to either pay up front fees or incur a debt to be paid off later through the taxation system could turn away people who were already struggling financially.
I did incur a HECS debt during my final year of a Bachelor of Education. For me, that one year worth of debt was a lot of money. Back then, a graduate teacher earned $28,000 before tax, but most of us didn’t earn that because it was hard to find work. I was worked as a casual relief teacher, and in my second year managed to pick up 2 days a week of regular work. The other 3 days, I depended on people calling in sick in order to work.
Schools were difficult to access by public transport, so I needed a car loan. I also had to furnish and rent an apartment that I shared with another graduate teacher. We lived for weeks on instant noodles and tinned tuna.
Fortunately, our HECS debt did not accrue interest at a commercial rate. Fortunately, we weren’t required to make repayments unless our income passed a certain threshold.
Paying off my HECS debt was not something that kept me awake at night worrying. My one year worth of debt was manageable once I started earning money, and with the help of a tax accountant, I paid it off after just a few years.
But HECS back then was a cost a lot less than HECS does now.
Deregulation of university fees will make it even more difficult for people to afford tertiary education, and commerical rates of interest on student loans will cause many to live with crippling debt at a time when housing has never been less affordable, and tertiary education has never been less likely to guarantee a job or a high income.
I don’t believe this is good for our society.
The US college system, which Minister Pyne aspires to, exists in a very different context. Unlike Australia, free tertiary education has never been a policy, so systems, like student loans have been developed to allow access for those who can not immediately afford the fees. But in the US there are many different student loans, there are also many grants and scholarships which can remove or significantly reduce the fee burden for many students.
Donelle Batty is currently studying in the United States and spoke with some students about how the student loan system impacts on their lives for our podcast, The Teachers Education Review. It’s an interesting listen and raises a number of issues to consider in the Australian context.
In the United States, students are required to make significant decisions about incurring debt from the moment they leave high school. But how well are they prepared for that, and how well do we prepare our students for that in Australia?
Now more than ever, I see an urgency to teach financial literacy in schools.