Blog: The Budget and Higher Education
By Finbar O’Mallon
Depending on how you view universities, economics and that clichéd ‘fair go’, the budget gets mixed opinions on education.
Here are some key points:
- The government will lower their contribution to your HECs fees from 40% to 60% by July 2016. Those of you currently studying, you will continue to under original arrangements until 2020.
- Higher education students will have to pay back their HECS sooner, with the government lowering the compulsory repayment threshold from $53,345 (2014/15) to $50,638 in July 2016. You will be taxed 2% of your debt once you go over the cap.
- A national equivalent of MySchools will be set up under the Higher Education Management System.
- Overall, the government is putting more responsibility to education funding onto states, so you should review your individual state budgets too.
- Universities will be allowed to set their own fees. Gavin Moodie from RMIT, writing for The Conversation, estimated that unis will initially raise fees by as much as 50%. Although you won’t be paying these higher fees up front, it just means you’ll owe more HECS that now has a higher interest rate.
- Your HECS no longer has a cap. You can borrow however much you want. This ties in with the above point, to compensate for increased fees.
- The government will reduce their contribution to higher education over three years from 2015, cutting $1.1 billion.
- Your HECS fees interest will be no longer be tied to inflation, but a government borrowing, capped at 6%. This brings interest rates in line with the “average mortgage” according to Emmaline Baxley writing for The Conversation.
- Gonski funding will be tied to the CPI, meaning small cuts to their promised Gonski contribution with funding to last for four years. The previous government had signed six year deals with the states, with the bulk of the funding to come in the last two years.
- An increase in spending on trades, diplomas and the like. Those doing a trade will be able to take out $20,000 loans from the government over a four-year period. But will no longer be able to get things like their tools covered by government grants.
- About $245 million will be going towards the school chaplaincy program
- The loan fees on FEE-HELP and VET FEE-HELP are gone.
The government has delivered on their wish to “set universities free”, by uncapping both fees and student borrowing limits.
The argument here is that universities will be able to provide better education at competitive rates, closer to the system in the United States. The counter-argument being that this only makes education more unaffordable (even considering HECS), and that students will mistake a higher price tag for courses as a sign of quality, which isn’t always the truth. However, the higher education equivalent of MySchools is perhaps meant to combat that sort of mistake.
But you can still cover all this on HECS, which is no longer, capped at about $90,000 meaning you can pursue all sorts of courses. On that, you may run yourself into debt of $100,000 plus, and you’ll have to pay it back sooner at higher interest rates.
Cuts to higher education funding puts more pressure on states and universities, so as noted, fees will jump quite sharply. In a few years, higher fees and interest rates may deter some from education and it’s unknown how well the attractive buy-now / pay-later HECS system will compensate for this.
If you’re leaving high school this year, you will be facing a much more expensive environment then those before you. A lot of commentators have dubbed higher education a loser in this budget.