HECS System Changes: impact on students

Gillian Beer, Bruce Chapman

    Research output: Contribution to journalArticlepeer-review


    In early 2002 the new Minister for Education, Science and Training, Brendan
    Nelson, announced a wide-ranging reform agenda with respect to the funding
    (and other areas) of Australian higher education. Over the ensuing months the
    Government released a number of discussion papers, in a process referred to as
    Crossroads, and initiated and promoted a series of consultations with stakeholders
    and others covering the essential issues.
    The process led to potentially far-reaching policy changes with respect to the
    financial operation of Australian universities, announced in the 2003-2004
    Commonwealth Budget, and passed by the Parliament in modified form at the end
    of 2003 (to take effect from 2005). An important part of the reforms concerns the
    nature and extension of the operation of the Higher Education Contribution
    Scheme (HECS), the income related arrangement for the payment of student
    charges introduced in 1989.
    This paper addresses several questions. One, what is likely to be the true
    financial cost for different types of students and graduates subject to increases of
    25 per cent in HECS charges (the new HECS-HELP arrangements), given that the
    first income threshold of repayment is to be increased substantially? Two, what is
    likely to be the true financial cost to different types of students and graduates of
    so-called ‘full-fees’, covered by an income related loan known as FEE-HELP?
    And three, what are the potential consequences for effective student charges of
    capping loans at $50,000, meaning that some students will have to face the
    unpalatable requirement of paying a proportion of the charges up-front?
    It is important to note that it is not possible to predict from this type of
    analysis the absolute numbers of students who will face higher, lower or
    unchanged effective HECS debts from the 2005 reforms. The reason is that there
    are no available data on the likely distributions of the future incomes of students
    and the number of graduates in the income categories modelled. We seek instead
    to illustrate the consequences for students and graduates with typical hypothetical
    debts and future incomes.
    A brief analysis of the benefits of income related loan arrangements, and a
    description of the changes to HECS to be implemented in 2005 follows.
    Subsequent sections, in turn, explain the methodology used to analyse the impact
    of changes on students, present the results under various scenarios for HECSHELP students, and describe the results for those paying full fees under different scenarios of FEE-HELP. These sections are followed by a commentary on the
    HECS-HELP and FEE-HELP systems and some conclusions.
    Original languageEnglish
    Pages (from-to)157-174
    Number of pages18
    JournalAgenda: a journal of policy analysis and reform
    Issue number2
    Publication statusPublished - 2004

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