The Federal Government’s plan to lower the threshold at which university students pay back Higher Education Loan Program (HELP) debts, formerly known as HECS debts, will only exacerbate the cost of living pressures and prevent a large portion of the thus indebted generation from buying a house, getting married and starting a family.
Unlike the good old days of free tertiary education, students are now being saddled with large debts for undertaking courses, some costing in excess of six figures. The Coalition Government in 2014 proposed deregulating university fees, which at the time was estimated to push the average cost of a three-year degree out to $50,000 by the mid 2020s, according to Parliamentary Budget Office analysis. In 2016 the Government backed down on deregulating fees amid a backlash.
Currently, a tertiary student must start to repay their HELP debt when their income reaches $55,874. The Government introduced legislation in February to lower the threshold at which the debt is required to be repaid to $45,000, after failing to have its legislation to lower the threshold to $42,000 pass the Senate in December.
Figures from the Australian Bureau of Statistics show that average weekly total cash earnings (wtce), that is, from a job plus any other earnings from investments, welfare, and so on, currently sit at $1,230.70 a week for all employees, or $63,996.40 a year. Of all employees, 60.3 per cent work full time and have an average wtce of $1,623.50 at an average age of 40.5 years. Part-time workers make up 39.7 per cent of all employees, and have a wtce of $634.70 or $33,004.40 a year at an average age of 37.7 years.
The fact that nearly four in 10 employees work part time and have a total cash earning of only $33,000 a year means that, after paying for rent, electricity, gas, food and so on, saving to buy a house, a car, to contemplate getting married and starting a family is for many out of reach. The added burden of a large university debt once they reach a less than average income of $42,000 means that putting money aside for these things is even more difficult.
The relatively high average age of 37.7 years at which 40 per cent of workers are earning $33,000 a year means that these people will most likely only gain decent earnings, if ever, much later in life, when they will need to save every dollar. For many in part-time work, the ability to raise a family is economically almost out of the question.
A real problem Australia faces is the need for higher taxes to pay for the increased welfare state to support a burgeoning ageing population that does not work or pay tax. Howard government Treasurer Peter Costello saw the need to increase the birth rate in order to stave off this looming crisis by offering a $5,000 baby bonus to encourage more births.
Successive governments myopically reduced and then removed this incentive, presumably in order to balance the budget, ignoring the fact that removing enticements to raise the birth rate would result in a worse taxpayer-to-pensioner ratio, ultimately rendering the budget and the economy far worse off.
By adding to the overall cost of living for university graduates at a time when they need to save, the Government is reducing their ability to save and discouraging them from marrying and starting a family, thereby exacerbating the demographic winter that will befall us due to insufficient birth rates.
The inability to scrape together a deposit or afford repayments on a house where median house prices are around $1.2 million in Sydney and $817,000 in Melbourne, is another cause of people delaying starting a family.
The blame for out-of-reach house prices falls heavily on the shoulders of all three levels of government, which have adopted policies to restrict land release and, until recently, allowed unfettered foreign investment in property, together conspiring to push land prices to astronomical levels.
The Federal Government’s Study Assist website claims that funding for higher education has risen by 71 per cent since 2009. Average funding for universities per student increased by 15 per cent between 2010 and 2015, while the cost for universities to deliver courses increased by 9.5 per cent over the same period, according to independent analysis from Deloitte.
It would seem that this discrepancy between funding and costs is adding to universities’ bottom lines. Have universities simply become a profit-driven industry, luring as many students (customers) as possible into completing courses with little prospect of a job afterwards, while having amassed sizeable personal debts?
ABC Radio Sydney interviewed eight university students after the 2017 budget announcement and asked them how they felt about the proposed changes to fees and the HECS (HELP) debt threshold. Most of them cited concerns about not being able to save enough to buy a house or afford rent and the stress of having a large debt together with the challenge of finding a well-paying job.
They worried about having to continue to live like a struggling student even after graduating because of an inability to earn a high wage and save enough money while repaying a large debt.
When governments look at reining in spending on tertiary education, they must take into account that increasing costs to students has flow-on effects that can damage the economy and the social fabric. When tertiary education debts add to the high cost of living and youth delay or relinquish the ideal of marriage, a family and a home, Australia will continue to fragment socially, birth rates will fall further, and disillusion with lawmakers will fester.
 Matt Wade and Alexandra Smith, “University students to pay $50,000 for an average degree”, The Sydney Morning Herald, April 7, 2016.
 “Govt pushes students to repay debt sooner”, SBS News, 14 February, 2018.
 6306.0 – Employee Earnings and Hours, Australia, May 2016, Australian Bureau of Statistics.
 Housing Affordability Ratings by Nation: All Markets, Table 8, p12, 14th Annual Demographia International Housing Affordability Survey: 2018.
 Study Assist, Higher Education Reform Package: Student Overview, December 18, 2017.
 Amanda Hoh and James Carmody, “Budget 2017: What university students think about the changes to fees, HECS debt threshold”, ABC News, May 2, 2017.