Universities Australia research predicts student debt levels will double

AUSTRALIAN university graduates could be slugged with debts that take them almost twice as long to pay off, according to new research.

UNIVERSITY graduates could be slugged with student debts that take them almost twice as long to pay off, under changes proposed by the federal government in last month’s budget.

New research from Universities Australia predicts student debt levels will double due to the Abbott government’s moves to change the indexation on student loans, reduce funding to universities and allow tertiary institutions to set their own fees.

The new modelling is in contrast to figures released yesterday by Education Minister Christopher Pyne which indicated a graduate with a HELP debt of $40,000 and a starting salary of almost $68,000 would only pay an extra $5 a week under the new system.

“I don’t think $3 or $5 a week is an unfair burden to place on students given they will go on to earn so much more than those Australians who don’t go to university,” Mr Pyne said.

But Universities Australia chief executive Belinda Robinson warned graduates who take time out to work part-time and raise children would be “particularly hard-hit” by the changes.

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The modelling shows an engineering graduate with a starting income of $56,000 and who earns about $90,000 after 13 years of full time work could spend the first 29 years of their working life paying off their HELP debts, if the interest on their student loans hits the six per cent cap.

Currently, it would take the same student 14 years to pay off their debt after graduation.

Universities Australia predicts the cost of an engineering degree — currently around $37,000 — could soar by 70 per cent to $63,000, and with student loan repayments subject to higher interest rates, the HELP debt for an engineering graduate could top $199,000.

The situation is as bad for engineering graduates who work part-time for six years while caring for children, with the research showing it could take them up to 28 years to pay off their student loan, up from 15 under the current system.

And nursing students could see their course fees rise by more than 90 per cent, from $19,398 under the existing system to $37,000 if the cost of a degree rises in line with what universities are charging international students.

Nurses who work part time for six years while caring for children could spend the first 22 years of their working life paying off student loans, up from 14 under the current arrangements.

Universities Australia is now calling for the government to reconsider its budget changes to higher education.

The call was backed by National Tertiary Education Union president Jeannie Rea who said universities could become too expensive for many young Australians.

“I’m really afraid that people will abandon considering going to university,” Ms Rea said.

“Ordinary middle income families will stop assuming that if their kids can get the marks, they will be able to go to university.”

Originally published as Universities Australia research predicts student debt levels will double