Indexation of HECS debts is creating inequity among students

It appears to me that education is a fickle thing. We are "encouraged" to pull ourselves up by our boot-straps, to better ourselves, educate ourselves, find self-efficacy through learning and development, to contribute to the national economy, skill, reskill, invest and reinvest in ourselves, but at what cost?

Looking back at Australian history, in a speech given in Bankstown before the 1972 election, Gough Whitlam famously said, "We believe that a student's merit, rather than a parent's wealth, should decide who should benefit from the community's vast financial commitment to tertiary education." It forms part of the Australian story where politics seemed to actually be about the people (as much as it can be) with genuine goals like 100 per cent employment, and subsequently Whitlam has been often remembered as a "Labor Folk Hero" (as acknowledged here).

It wasn't just about the fees, though. Along with fee-free tertiary education, the Whitlam government introduced a system of student assistance that still exists today through Youth Allowance, Austudy and Abstudy, which gave students the opportunity to realistically accept a university place and attend classes.

Of course, this came at a cost.

In the 1974/1975 Whitlam budget, the education Appropriations Bill included a budget of $472.3 million for universities alone ($4.78 billion in today's money), marking the beginning of the free uni era in Australia, with an estimated total outlay on education across the board (from pre-school to post grad) of $1.5 billion ($15.5 billion in today's money). This reflected 347 per cent budgetary growth in education since 1972/1973. Why invest this kind of money in education? Because "[e]ducation remains a high priority area for the government" (Appropriations Bill, September 17, 1974).

Buuuut, all good things must come to an end. Well, if not an end, to a change. While initially, the program was manageable - largely because those living at the lower end of the socio-economic spectrum didn't finish high school at the same rates as the affluent cohorts, with an increasing number of Australians starting to complete school and seek to attend uni in the 1980s (because the program was working), fee-free tertiary study was becoming a budgetary nightmare.

The re-introduction of uni fees began under the Hawke Labor government in 1989, with the establishment of the Higher Education Contributions Scheme (HECS), proposed by Professor Murray Wells and developed by economist and ANU lecturer, Bruce Chapman.

As far as student loans go, it could have been much worse: afterall, it still made uni accessible. But much like those "5 years interest free!" marketing campaigns, it's much easier to sign on the dotted line to an undisclosed debt amount when you don't have to worry about repayments straight away. Especially when none of the fact sheets about the scheme clearly demonstrate the fees, charges, and indexation that students face.

When I signed on the dotted line, for example, there was a 15 per cent discount for voluntary repayments. This was reduced to 10 per cent in 2005 under John Howard (Coalition), to 5 per cent in 2012 under Julia Gillard (Labor), and abolished completed in 2017 under Malcolm Turnbull, (Coalition). Further changes over the last five years have seen uni funding decline, fees increase, and the debt repayment threshold reduce considerably.

However, the biggest stress-factor for graduates is the indexation attached to the existing debt. The ABC shared Gemma McWhirter's story - a teacher, who graduated with a $10,800 debt. While she was out of the workforce raising her three children for 15 years, her HECS debt more than doubled. It took Ms McWhirter 27 years to pay off her debt.

It sounds fair and reasonable to not require repayments for your loan while you aren't working, but what many graduates don't realise is that while you aren't paying it off, the debt is growing: meaning those who are less well off, end up paying more for the same degree their wealthier study buddies earn. And this debt is a "real" debt - it will impact your ability to buy a house, or a car.

The system started off with the right idea - merit-based accessibility to education; but since then, it has turned a $15billion investment (equivalent) in the future of our nation into a $68.7billion debt strangling 2.9million Australians.

I'd love to hear about a plan to address this. I'm sure the 2.9 million voters with debts alongside me would too.

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