How Far We've Come with NGS Super - The HECS Chronicles
Part 3: The HECS Chronicles
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Where to start…
Aussie universities have been around for a long time - the first one, Sydney University, was founded in 1850. But we’re going to fast forward to 1969 when Gough Whitlam, then the Labor leader who would become PM in the following years, made a promise...
If elected, he would dump university fees. Up until then, students had been paying various amounts, depending on their eligibility for a post-war scholarship. Whitlam thought the system was unfair, and he wanted to make universities accessible to middle and working-class Australians.
And then Whitlam was elected…
And in 1974, he made good on that promise. Free uni degrees lasted for about 14 years, benefitting a couple of generations of Aussies. But, as they say, all good things must come to an end…
So, what happened?
Fast forward to the late 1980s, and more Year 12 students were heading to uni, which meant free uni was taking a hefty toll on the federal budget. Enter: PM Bob Hawke...
What did he do?
He implemented the Higher Education Contributions Scheme (aka HECS-HELP/aka HECS). The concept was that the government provides a loan to help cover the cost of a student’s degree, and they pay it back once they’re earning over a certain threshold.
So how much were students being asked to eventually pay?
When HECS was introduced in 1989, the idea was that all university degrees would cost the same amount - $1,800 per year. It increased slightly over time, but those flat rates stayed until there was a change in government.
Enter John Howard…
Yep, and his government introduced a 3-tiered system for uni fees in 1996. The amount students were charged depends on how expensive the course was to provide and the graduate’s likely earning potential.
So some degrees were more expensive than others?
Exactly. Law and accounting degrees became some of the most expensive - they were classified as band 3 courses with a HECS debt of $5,500 per year. Band 1 fees were set at $3,300 per year - that was for courses such as education and humanities.
That’s quite a jump…
Yep. And then from 2003, indexation applied to HECS debts, so the debt started to increase at a rate reflecting inflation.
Which has become a bit of a thing…
Yep, and to explain why that is - when it was first introduced, indexation was set at 3.5%. In 2020, when COVID hit, the rate fell to 0.6%. And this year, the 2023 indexation rate on HECS debts rose to 7%. That applied to more than 3 million current students and past students.
Sounds like a lot of debt…
It can be. During this time, course costs have also risen… In 2023, course fees range from $4,124 to $15,142 a year. And that’s set to go up in 2024.
So how do universities get money to run?
They get government research and teaching grants and student fees supported by the HECS scheme. And if you’re wondering why international students are so important, the Bureau of Statistics data recently revealed the international education sector is worth $37 billion to our economy, with universities getting a good whack of that.
Over 5.5 million Aussies have gone to university. That’s more than a quarter of the adult population.
How it works: If you’re an Aussie citizen, you’re eligible for a Commonwealth-supported place at university. That’s where the government pays for some of your course fees, and you pay the part left over, usually via the HECS scheme.
The fine print: HECS repayments are made through the tax system when your income reaches a certain level. In FY24, repayments kick in when you start earning over $51,550.
• $24,800 - The average HECS debt is for an undergraduate degree, but some people can accumulate over $50,000 in HECS debt. Looking at the total amount of HECS debt carried by Aussies - it’s $74 billion.
• 1.4 million - The number of students enrolled in one of the 170 Australian higher education institutions. About 360,000 of those are international students, who are not eligible to receive HECS and have to pay the full fee, often between $60-80,000.
• 130,000+ - The number of people who work in academic and professional roles at Australian universities. When COVID hit, international students who couldn’t get here and around 35,000 uni jobs were culled. While international students have been returning, many say the jobs haven’t been…
Where to from here?
• Academics have said that since COVID, their workload has increased dramatically. In this report, one lecturer said he had 5 minutes per assignment for a task worth 20% of a student’s grade. If you’re an international student paying tens of thousands, you might not be happy with that level of attention…
• Students are also grappling with rising debt levels, which can be even more challenging to manage due to the cost of living crisis. This ABC article compares the cost of getting a university degree across 3 generations.
• In 2022, the Albanese Government announced a review of Australian universities, covering everything from the affordability to the effectiveness of turning out people for Australia’s changing workforce. It’s due at the end of the year, so watch this space…
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