Australia has one of the best education systems available as evidence by our top 10 rankings for literacy, science and mathematics as well as our overall education index of 0.993, tying us for first place with countries like Denmark and Finland. While our system isn’t exactly unique in its implementation I do believe schemes like HECS/HELP are one of the main reasons that the majority of Australians now pursue tertiary education and whilst this might bring about other issues (like a lack of people in trades) it’s clear that benefits far outweigh the costs. Indeed as someone who couldn’t have afforded university without the help of the government and now has a great career to show for it I’m something of a testament to that idea.

Recently however there’s been some criticism of the HECS-HELP system, mostly focused on the amount of student debt owing to the government and the sizeable chunk of that which is never expected to be repaid:

The Grattan Institute’s annual Mapping Australian Higher Education report finds that students and former students have accumulated HECS-HELP debts of $26.3 billion.

This is about an extra $10 billion owing, in real terms, than in 2007.

The interest bill on the income-contingent loan scheme, formerly known as HECS, is nearly $600 million a year, the institute estimates.

And it says HELP debt not expected to be repaid rose to $6.2 billion in 2012.

The report makes for some intriguing reading and does indeed state that there’s a good 25% or so of the current student debt that’s likely to never be repaid. The reasons behind it though are interesting as whilst some would have you think that it’s due to students skipping out on their debts in way or another (ala Liberal MP Steve Ciobo) it’s in fact primarily due to students either dying or moving overseas. Now there’s not a whole lot we can do about the former (except maybe investing more in the health care sector) but the latter is a problem that’s been around for decades and I’ve yet to see a solution proposed, either from the government or the private sector.

Australian graduates, especially in some sectors, suffer from a distinct lack of choice when it comes to finally finding a career once they’re done with their university studies. Whilst I might have managed to make a decent career without looking too far you have to appreciate the fact that my degree isn’t in IT, it’s in engineering, and such is the case for many graduates who try to find something in their chosen path. Usually they can get close but the chances of landing an opportunity directly in their field of study are usually pretty slim and that leads them to look overseas. I myself did exactly that not too long after I graduated and was pretty staggered at the number of opportunities available abroad that I was more than qualified for.

HELP Debt outstanding 1989 to 2011

Another point that the report makes is that student debt is seemingly sky rocketing when compared decades prior. The graph above demonstrates that quite clearly but it doesn’t give you any indication as to why this is happening. For starters Australia’s population has increased by about 5.8 million in since 1989 or about 35%. At the same time participation in tertiary education has well over doubled in this time with the vast majority having some form of tertiary qualification and  27% of all Australians now carrying a bachelor’s degree or higher. Essentially there’s been a major cultural shift over the past 2 decades towards pursuing an education through universities rather than other avenues and this is what is responsible for the increase we’ve seen. This isn’t exactly an issue considering our GDP has quadrupled in the same time frame and whilst I won’t say there’s a causative link there I’d say you’d be hard pressed to uncouple higher education rates from improved GDP figures.

Realistically the issue of unpaid student debts isn’t much of an issue for the Australian government considering the wide reaching benefits that our high quality and freely available education system gives us. We still need to do something about our best and brightest moving overseas to greener pastures but it’s clear that the economic benefits of free education for anyone who wants it vastly outweighs the cost of providing it. Even if we were to erase all student debt in one year it would still be only a few percent of the total budget, something that could be easily done should there be any burning need for it to happen. There isn’t of course since the cost of servicing that debt is so low (comparatively) and there are much better things to spend that money on.

About the Author

David Klemke

David is an avid gamer and technology enthusiast in Australia. He got his first taste for both of those passions when his father, a radio engineer from the University of Melbourne, gave him an old DOS box to play games on.

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