Higher education expert calls for 15 per cent loan fees on student debts

YOU could soon be stuck paying more for your university degree, which are becoming more and more useless in today’s job market.

YOU could be stuck paying more for your university degree, which are becoming more and more useless in today’s job market.

The Grattan Institute’s higher education program director Andrew Norton wants to slap a 15 per cent loan fee on every current and past student’s HECS/HELP debt, which could see graduates stuck with the loan for an extra year.

In a new report, Shared interest: a universal loan fee for HELP, Mr Norton suggests the extra fee will stop the government spending so much money on university education.

In mid-2016, the total HELP/HECS debt in Australia was about $52 billion.

The report says the government pays a low interest rate on the current debt, but it could increase by 60 per cent in the coming years, costing the government more money.

According to Mr Norton, the government could have saved $700 million this year if the loan fees were in place.

The loan fees won’t change the threshold, with graduates still not required to pay back their HELP/HECS loan until they earn about $55,000, but graduates could be paying off their debt for longer to cover the new fee.

University students may have to pay a 15 per cent loan fee on HELP/HECS debt.

Mr Norton believes the loan fee will have very little impact on current and past university students.

“Loan fees are both fair and necessary. Without change, HELP’s costs will escalate, risking damaging cuts to other education programs,” Mr Norton said.

The director of the Innovative Research Universities group Conor King told Fairfax Media there would be no improvement to education to warrant the loan fee.

“The university or other [education] provider gains nothing from it. The education delivered is not any better resourced,” he said.

University degrees are becoming more useless and are seen as just a piece of paper, with news.com.au reporting earlier this year they could be just a waste of money.

Big employers like Penguin Random House and Ernst and Young even scrapped the idea prospective employees needed a university degree.

Many employers are taking this road with the belief university students are graduating with no real skills or have learnt the wrong thing.

In Australia, there is a sea of university graduates but only a limited amount of jobs.

University students are feeling the pressure to go on and study their masters and honours to remain competitive in the job market.

Andrew Norton, leading higher education expert with the Grattan Institute, has come up with a plan to stop the government spending so much on university education.

Graduate employment is the lowest it has been since the 1992-93 recession, with the 2015 Graduate Careers Australia survey finding a quarter of graduates with bachelor degrees couldn’t find work within four months of leaving university.

According to the Grattan Institute’s Mapping Australian Higher Education 2016 report, only half of people who graduated with science degrees in 2015 found fulltime employment within four months.

In 2014, 42.5 per cent of employers admitted to not hiring any graduates at all.

According to Mr Norton’s report, more than four million Australians borrowed money so they could attend university.

The HELP/HECS loan scheme was introduced in 1989 to help cash-poor students get an education.

The report said the amount of money borrowed for university each year was growing rapidly but repayments were flat, with low-income graduates paying off their loans either very slowly, or not at all.

HELP/HECS loans take years for postgraduates to pay off, and to fully pay the debt off in one year, you’d need to earn more than $300,000 a year.

Originally published as Higher education expert calls for 15 per cent loan fees on student debts