University fee deregulation (1 Viewer)

[jdennis]

In terms of personal welfare, of course it's a bad thing. This is where you need to find out where the extra money is going and whether this will make up for loss on the student's side.

Keep in mind that HECS is a passive debt - it comes directly out of your pre-tax income. This isn't like your standard bank loan and this is why the enrolment rate is high for tertiary institutions.

Psychologically, having a debt which pays itself off by itself is appealing compared to a debt which you actively have to manage your finances to maintain. This is why I don't particularly buy the argument that students will be discouraged by tertiary education now. I'd be curious to see how much extra graduates will have to pay in tax per year as a result of fees increasing. I'm confident that when you break the numbers down, it won't be that much in the long run.

A debt is a debt though, agreed? Anyone smart enough to be going to university should see that a HECS debt is as much of a liability as any other. The way it's paid back isn't really relevant, but the amount is, and this is what will be increasing.

 

[Smooth Operator]

In terms of personal welfare, of course it's a bad thing. This is where you need to find out where the extra money is going and whether this will make up for loss on the student's side.

Keep in mind that HECS is a passive debt - it comes directly out of your pre-tax income. This isn't like your standard bank loan and this is why the enrolment rate is high for tertiary institutions.

Psychologically, having a debt which pays itself off by itself is appealing compared to a debt which you actively have to manage your finances to maintain. This is why I don't particularly buy the argument that students will be discouraged by tertiary education now. I'd be curious to see how much extra graduates will have to pay in tax per year as a result of fees increasing. I'm confident that when you break the numbers down, it won't be that much in the long run.

You will still be paying it off for a solid part of your life.

And putting the HECS repayments to market rates will make matters worse. The financial sector will be laughing all the way to the bank.

http://www.theguardian.com/commenti...ees-are-in-its-checkmate-for-christopher-pyne

 

[OzKo]

A debt is a debt though, agreed? Anyone smart enough to be going to university should see that a HECS debt is as much of a liability as any other. The way it's paid back isn't really relevant, but the amount is, and this is what will be increasing.

You will still be paying it off for a solid part of your life.

And putting the HECS repayments to market rates will make matters worse. The financial sector will be laughing all the way to the bank.

http://www.theguardian.com/commenti...ees-are-in-its-checkmate-for-christopher-pyne

This still doesn't answer the question.

How much will these future taxpayers be out of pocket each year?

Effectively, higher fees is akin to a higher income tax for people who graduated university. The level of repayments increases as your own income increases as well.

It's all good and well to say that students will be burdened with a much higher liability, but financial decisions are very much psychological rather than mathematical.

 

[OzKo]

Ran some numbers using this website:

http://www.whatwillmydegreecost.com.au/

Noted that I was an 18 year old female planning to do business (to make sure I would capture someone who starts off under the new regime + likely to pay more because they have a career break to have children, thus interest accrues).

Under current rules, they would have a debt of $29k. After dereg, and assuming that fees go up (they will but don't expect them to rise as much as being estimated), the same student will have a $82k debt.

Assuming that they get a job at $55k and the repayment rates stay the same (I haven't seen any mooted changes to this), then they would pay an extra $2100 per year for HECS, taken directly from the pre-tax income. This would increase as income goes up, but of course, income is increasing as well to suit.

Link to current repayment rates:

http://studyassist.gov.au/sites/studyassist/payingbackmyloan/loan-repayment/pages/loan-repayment

The real kicker is that these people will effectively be paying more tax for a longer period of time. In terms of impact to livelihood, a student with a university degree should do well enough to not be burdened by this increase.

 

[Smooth Operator]

This still doesn't answer the question.

How much will these future taxpayers be out of pocket each year?

I am not equipped with sufficient information to answer that question. However the amount paid overall is still going to be greater. Resulting in less income for a prolonged period of time which instead could be of taxation revenue to the government rather than repayments to financial institutions.
If it's psychological in nature then it's safe to assume it can possibly deter good university students from undertaking tertiary study right?

 

[OzKo]

I am not equipped with sufficient information to answer that question. However the amount paid overall is still going to be greater. Resulting in less income for a prolonged period of time which instead could be of taxation revenue to the government rather than repayments to financial institutions.
If it's psychological in nature then it's safe to assume it can possibly deter good university students from undertaking tertiary study right?

Are they selling off the debt to financial institutions? I was under the impression that they would use the market interest rate but still collect internally.

 

[Smooth Operator]

Ran some numbers using this website:

http://www.whatwillmydegreecost.com.au/

Noted that I was an 18 year old female planning to do business (to make sure I would capture someone who starts off under the new regime + likely to pay more because they have a career break to have children, thus interest accrues).

Under current rules, they would have a debt of $29k. After dereg, and assuming that fees go up (they will but don't expect them to rise as much as being estimated), the same student will have a $82k debt.

Assuming that they get a job at $55k and the repayment rates stay the same (I haven't seen any mooted changes to this), then they would pay an extra $2100 per year for HECS, taken directly from the pre-tax income.

Link to current repayment rates:

http://studyassist.gov.au/sites/studyassist/payingbackmyloan/loan-repayment/pages/loan-repayment

The real kicker is that these people will effectively be paying more tax for a longer period of time. In terms of impact to livelihood, a student with a university degree should do well enough to not be burdened by this increase.

Well done with the research, that's quite an optimistic figure, the problem is we won't really know what the rates will be until 2016?

You'd hope it wouldn't bring too much detriment to your livelihood, but remember this government was the one which was all up in arms about the cost of living not so long ago?
Anyways, by having larger fees and thus larger, longer repayments it may affect their chances to save for a mortgage deposit and to get a mortgage and to save for material wants. Obviously in the scheme of things the proposed changes aren't and won't be the end of the world if passed (which they probably won't be), but I see them doing more harm than good. We can sit here and play hypotheticals about it all day. I guess we may not know, or we will find out eventually.

 

[OzKo]

Anyway, as I said before, increases in fees will indeed negatively impact tax payers.

But find me someone who will refuse to go to university because their income is taxed down to $51k under dereg from $55k rather than $54k or down to $77k under dereg from $82k rather than $80k.

In relative terms, the numbers are small enough to avoid distorting big purchase decisions like buying a home.

 

[OzKo]

Well done with the research, that's quite an optimistic figure, the problem is we won't really know what the rates will be until 2016?

You'd hope it wouldn't bring too much detriment to your livelihood, but remember this government was the one which was all up in arms about the cost of living not so long ago?
Anyways, by having larger fees and thus larger, longer repayments it may affect their chances to save for a mortgage deposit and to get a mortgage and to save for material wants. Obviously in the scheme of things the proposed changes aren't and won't be the end of the world if passed (which they probably won't be), but I see them doing more harm than good. We can sit here and play hypotheticals about it all day. I guess we may not know, or we will find out eventually.

And that's the thing, students are literally protesting about this increase in their fees (a few thousand more per year than before - effectively replicating a drag on wage growth by 1-2 years) but not debating where those fees are going.

That's where the real debate should be.

 

[Smooth Operator]

Are they selling off the debt to financial institutions? I was under the impression that they would use the market interest rate but still collect internally.

They would still have to source the finance regardless, I'm sure not all of it being from the tax payer. I'm unsure as to whether they'd sell it off to financial institutions, it would make sense. To be honest I don't really know.

 

[OzKo]

They would still have to source the finance regardless, I'm sure not all of it being from the tax payer. I'm unsure as to whether they'd sell it off to financial institutions, it would make sense. To be honest I don't really know.

HECS-HELP won't be changing structurally from my understanding. They would not need to approach financial institutions like they do in the US. The system is preserved as is but the fees would ultimately change.

Once you get the banks involved, then you would start to get legitimate concerns cropping up.

 

[Smooth Operator]

Cheers OzKo for shedding some alternate, constructive light on the issue.

Not wanting to derail the thread, but the current political climate in Australia is a mess. We're never under the current system going to get adequate answers to questions from those who 'represent' us, or rather their interest/lobby groups.

 

[OzKo]

Cheers OzKo for shedding some alternate, constructive light on the issue.

Not wanting to derail the thread, but the current political climate in Australia is a mess. We're never under the current system going to get adequate answers to questions from those who 'represent' us, or rather their interest/lobby groups.

No worries mate.

 

[Smooth Operator]

HECS-HELP won't be changing structurally from my understanding. They would not need to approach financial institutions like they do in the US. The system is preserved as is but the fees would ultimately change.

Once you get the banks involved, then you would start to get legitimate concerns cropping up.

I guess if it passes we might get a fairly definitive answer.

Banks ultimately run the show anyway, that's just how it is.

 

[OzKo]

Anyway, I wouldn't be too phased about it.

It's a very topical policy and I expect it to be reversed in the event that the current Government are voted out.

 

[isildurrrr1]

Taking into account college as well, which I believe is different to a university degree?

No it is exactly the same thing. It is still a 4 year bachelor degree. The term college and university is entirely interchangeable in the USA.

Fees are hugely expensive in the US and still doesn't stop people from entering university. People will enter uni because they think it gives them an edge in getting a job and what not. Problem with the US is that they have a lot of for-profit universities that's banking on people's access to federal loans and intake anyone.

People also forget Australia's tertiary education makes a lot of money from international students.

I highly doubt de-regulating univeristy fees will change much in terms of overall attendance. Most people who do go to uni's usually do come from middle-upper income backgrounds, regardless of whether or not fees are in place. I find it funny that people whose parents sent them to a 20k+ a year private school are bitching about uni fees. Uni in this country is VERY cheap even compared to in-state schools in the USA or even the UK.

 

[OzKo]

The Abbott government is offering to ditch or delay the most controversial elements of its sweeping higher education reforms to secure a deal with the Senate cross-benchers to allow universities to set their own fees.

The government announced in the May budget that it would deregulate university fees, apply a real interest rate to student debts for the first time, cut university course funding by 20 per cent and extend Commonwealth funding to private colleges.

The changes are the most radical reforms to higher education policy since the introduction of the HECS repayment scheme 25 years ago.

Education Minister Christopher Pyne and university vice-chancellors have been intensely lobbying the Senate cross-benchers to support fee deregulation ahead of a Senate debate on the government's higher education bills next week.

The government's negotiating position is that it is committed to fee deregulation but is willing to make major concessions on the other elements of the package even if this means giving up significant short-term savings.

The back-down would follow other major concessions from the government on welfare reform, paid parental leave and spending measures associated with the mining tax.

Fairfax Media can reveal that the government is willing to:

• reduce the 20 per cent course funding cut to 12 to 15 per cent;
• delay the expansion of Commonwealth funding to private colleges by three years;
• abandon the plan to peg student debts to the 10-year government bond rate; and
• fund a structural adjustment package to help universities transition to a free-market system.

With Labor and the Greens fiercely opposed to fee deregulation, reform advocates are concentrating their efforts on winning over the Palmer United Party, Australian Motoring Enthusiast Party senator Ricky Muir and independent senator Nick Xenophon.

While Clive Palmer and Jacqui Lambie have said they will not support fee deregulation, PUP senators Dio Wang and Glenn Lazarus are seen as more open to persuasion. Senator Xenophon has expressed concerns about fee deregulation but has listened closely to arguments from university vice chancellors that the current funding model is unsustainable.

A spokesman for Mr Pyne said: "The government is continuing to discuss the higher education reforms with the cross-bench senators and as the Minister has previously stated 80 per cent of something is better than 100 per cent of nothing.

"The deregulation of the higher education system is the centrepiece of the government's reform, strongly supported across the sector by Universities Australia and all other peak bodies."

Mr Pyne on Friday rejected the report but stressed he was willing to negotiate.

"It looks like a grab bag of wish lists from certain people but it's certainly not the government's position - Fairfax strikes again," the Minister told Channel 9's Today show.

"I've said all along we'd negotiate, right, and we will negotiate but this grab bag of certain changes is all news to me."

The government's plan to extend Commonwealth funding to people studying diplomas, sub-bachelor degrees, or undertaking degrees at private colleges or TAFEs would cost $820 million over three years.

Delaying the expansion of financial assistance to students at for-profit colleges from 2016 to 2019 would save around $450 million and help to offset a reduction of the 20 per cent course funding cut.

Watering down the funding cut would also help ease concerns about massive fee increases under a deregulated system.

Universities have strongly opposed the funding cut, arguing they will have to increase fees by 20 per cent to maintain current resourcing levels.

The government has recognised that it will not secure support for its unpopular plan to index all student debts at the 10-year government bond rate. The plan was criticised because it would hit women and poor graduates the hardest due to the time they spent outside the workforce.

The interest rate is expected to remain pegged at inflation although the government is closely exploring alternative interest-rate models that would be less onerous for graduates.

Modelling by education economist Bruce Chapman, the architect of the HECS repayment scheme, found poor graduates would pay 30 per cent more for a degree than their high-income counterparts under the government's original proposal.

Mr Pyne's spokesman confirmed that almost $300 million in funding for the National Collaborative Research Infrastructure Strategy and the Australian Research Council's Future Fellowships scheme - both seen as vital in the university sector - depends on savings achieved through the government's reforms.

Labor higher education spokesman Kim Carr said the government should abandon its entire package.
"Fee deregulation would still see massive increases in costs for ordinary Australians who go to university," he said. "That is the fundamental injustice of the government's package."

http://www.smh.com.au/federal-polit...higher-education-reforms-20141023-11asnr.html

 

[jdennis]

http://www.smh.com.au/federal-polit...higher-education-reforms-20141023-11asnr.html

Seems like they're realising no-one is going to vote for their policies and they're going to have to find better ways to fix the budget "emergency" than screwing over the most vulnerable people.

 

[isildurrrr1]

Seems like they're realising no-one is going to vote for their policies and they're going to have to find better ways to fix the budget "emergency" than screwing over the most vulnerable people.

how are uni students "the most vulnerable people"