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HECS needs an overhaul, says expert panel

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An independent review of Australia’s higher education system has called for an overhaul of the national student debt system, HECS.
HECS overhaul

An independent review of Australia’s higher education system has called for an overhaul of the national student debt system, HECS.

It comes after the Federal Government appointed the Universities Accord Panel to advise ways to improve the higher education sector.

In its final report, the panel recommended overhauling student debts to make education more affordable, encouraging more students to enrol in and obtain university degrees.

Background

The Universities Accord Panel is a dedicated body aimed at improving the quality of higher education in Australia. It’s made up of six higher education professionals.

The panel consulted students, education providers and organisations, and combed through hundreds of public submissions.

Its 12-month review is considered one of the most comprehensive and detailed overviews of the tertiary sector.

HECS

The Higher Education Loan Program (HELP, commonly called ‘HECS’), ensures students can go to university without having to pay for a course upfront. Students pay off their HECS debt to the government after they begin earning above a certain threshold.

In 2020, the government announced changes to HECS. These changes made it cheaper for students to complete courses in ‘priority’ areas like healthcare and education. At the same time, it increased how much students paid for popular degrees like communications and law to encourage students to pursue courses with a greater need for skilled graduates.

The panel analysed the effectiveness of the 2020 changes to HECS. It found that overall, students were paying more for higher education.

It said the scheme had failed and called for a HECS overhaul.

The panel suggested a HECS model where the cost of a degree is determined by a student’s future potential earnings, not the future demand for their occupation.

For example, based on the potential salary of a lawyer compared to a teacher, it could become more expensive for a student to complete a law degree, but more affordable to study primary education.

HECS indexation

The report said Australia’s student loan system needed to be “modernised”. This included overhauling the ‘indexation’ of student debts — when the amount a student owes increases to reflect inflation (rising prices) on 1 June each year.

Student debts have been particularly impacted by recent economic pressures.

The review suggested a cap on indexation to avoid significant increases during periods of high inflation.

Minimum HECS repayments

At present, workers must start repaying their HECS once they begin earning above the minimum repayment threshold of $51,550.

The report raised concerns about this threshold, which it said is adding financial strain for low-income earners.

The panel recommended reducing how much those earners, which it said were “more likely to be women”, must pay back once they meet the threshold.

Government response

The report’s proposals are now being considered by the government.

Education Minister Jason Clare said the findings would help create “a better and fairer education system”.

Shadow Education Minister Sarah Henderson said Clare had been “sitting on the report for two months”, and said the government had “no plan or priorities for Australian universities”.

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