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New higher ed bill still doesn’t solve the biggest problem: debt

Written by Dr Tim Pitman for The Conversation

On Tuesday night, the Senate voted to block the government’s Higher Education Reform Bill. Despite last-minute negotiations, consensus could not be reached regarding its signature element – fee deregulation.

Education Minister Christopher Pyne views this as a delay rather than a defeat. He has already reintroduced the reforms into the House of Representatives. While there might be political imperatives for moving so quickly, such haste is not conducive to good policy.

It is still unclear how public debt will be affected – and managed – if universities can set their own fees. More importantly, it is also uncertain how HECS-HELP will be sustained – not just for the term of this parliament, but for the foreseeable future. This is just as much a social as an economic problem because if we break HECS, it’s the disadvantaged students who will feel the effects the most.

On introducing the second version of the legislation into the lower house on Wednesday morning, Pyne said the bill would now encompass measures including:

  • keeping HECS indexation at the CPI level rather than the proposed 10-year bond rate;
  • introducing a five-year “HECS pause” for the primary carer of a new child;
  • enhancing the proposed Commonwealth Scholarships scheme to target disadvantaged students; and
  • ensuring domestic fees are less than those for international students.

These amendments address some of the concerns raised by Senate crossbenchers. However, particular attention must be given to the sustainability of HECS-HELP. Since HECS was introduced in 1989, the money raised through the reintroduction of student contributions has helped fund the sector’s expansion, radically increasing the supply.

At the same time, the creation of the HECS system has ensured more students – particularly those from disadvantaged backgrounds – are not discouraged from participating and can afford to do so.

Rising fees means rising public debt

This comes at a public cost. Some students are never able to repay their student loan and at this point it becomes public debt. Like the health or welfare system, it’s a red line in the national budget; one that is accepted because of the overwhelming benefit it brings to the nation.

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Posted 3 December 2014 Posted in Editorial, General, Low SES