Unis to charge more for degrees in 2024 as HECS architect blasts banks over loans

A university degree will cost more this year — particularly for some professions — as the architect of HECS blasts banks for counting the debt in home loan applications.

National Union of Students president Ngaire Bogemann says HECS-HELP debts are ‘keeping students in poverty longer’. Picture: Getty Images

University fees will soar 7.8 per cent this year, as the architect of Australia’s student loans scheme blasts banks for “unfairly” counting the debt in home loan applications.

Degrees in law, accounting, commerce and communications will cost $16,323 this year — $1181 more than students were charged last year.

The inflation-based fee hike could cost students an extra $3500 for a three-year degree.

The cheapest degrees – in nursing, teaching, mathematics and agriculture — will rise by $321 this year to $4445 for one year of study.

Students will pay $8948 this year — $647 more than last year — to study engineering, allied health, computing, environmental studies or science.

Five or six-year degrees in medicine, dentistry and veterinary science will cost nearly $1000 extra this year, after the federal Education Department revealed fees of $12,720 to cover the cost of subjects taken this year.

Students can borrow money to pay their fees through the federal government’ HECS-HELP university loan scheme.

But high inflation will hit them with a financial double-whammy, as both tuition fees and outstanding student debts jump in line with the CPI (consumer price index) this year.

The architect of HECS, Emeritus Professor Bruce Chapman - who has been commissioned by the federal government to review the 35-year-old scheme – declared yesterday that banks should not include student debts in home loan applications.

“It’s unfair on borrowers,’’ he told The Australian.

“The banks should not care about your HECS debt, but what your disposable income is.

“It is inappropriate to take stock of debt when it is income-contingent.

“HECS debt has no real rate of interest – it’s not like a credit card.’’

ANU economist Bruce Chapman says banks are wrong to assess borrowers based on HECS-HELP debts. Picture: AAP

National Union of Students president Ngaire Bogemann said it was wrong that young graduates trying to buy their first home were being slugged with HECS repayments, when baby boomers enjoyed a free tertiary education with lower housing costs.

“It’s keeping us in poverty longer,’’ she said.

“We end our degrees with a massive ballooning debt hanging over students’ heads as they move into adulthood.

“It’s delaying them from starting families, buying a house and getting a credit card.

“Young millennial and Gen Ys are looking at becoming the most indebted generation in Australian history.’’

HLB Debt Advisory mortgage broker Betty Preshaw said that outstanding HECS-HELP debts reduce borrowing power.

“If you’ve got HECS debt, it’s treated like any other debt such as a personal loan or a credit card, and it absolutely impacts on your ability to borrow,’’ she said.

The Australian Banking Association yesterday said responsible lending obligations required banks to consider all debts held by a customer.

“Existing debt, whether it’s a car loan, a credit card or a HECS debt, will impact a customer’s ability to take on and to repay new debt, so needs to be considered in a loan assessment,’’ a spokeswoman said.

“HECS-HELP is specifically referred to in ASIC’s (the Australian Securities and Investments Commission) regulatory guidance as an example of the kind of outgoing a customer is less likely able to reduce or eliminate.

“Prudent lending by banks is critical for protecting consumers.’’

Professor Chapman devised the student loan scheme, which lets students postpone the payment of university tuition fees by taking out interest-free loans from the federal government.

Graduates must start paying back the loan when they earn $51,550 a year, when 1 per cent of their income is repaid through the tax system.

Once graduates earn an average wage of $96,000 a year, they must pay 6 per cent of their income towards their HECS-HELP debt.

Those earning $150,000 a year have 10 per cent of their income levied to repay their student debts.

Nearly 3 million graduates owe a total of $78 billion – an average of $26,500 each.

Debts are indexed each year in line with inflation and are on track to rise 5 per cent this year, following last year’s 7.1 per cent increase.

Professor Chapman, who is an economist at the Australian National University, is advising the government’s Universities Accord review on the affordability of higher education, including HECS-HELP debts.

He identified flaws in the scheme yesterday, pointing out that the annual indexation rate calculated at the end of June each year can “scare’’ graduates who suddenly saw their debts balloon.

Last year’s 7.1 per cent CPI increase added $5.3 billion to total student debts, averaging $1800 per graduate.

Students were slugged the full amount, even if they had repaid some of their debt earlier in the year.

“Some people might have paid off a lot of the debt and be hit with indexation – that’s unfortunate and that has to be fixed,’’ Professor Chapman told The Australian.

“You can smooth that out so that instead of it being 8 per cent over a year, it could be adjusted every quarter by 2 per cent.

“Frankly it doesn’t make any difference, but it’s not so scary.’’

Professor Chapman said it would be too expensive for the government to abolish indexation, which ensures that debts are pegged at their real value over time.

“In the long run, (graduate) wages will go up more than prices,’’ he said.

“It would be pretty unfair to get rid of indexation when the cost of that is borne by taxpayers.

“Most taxpayers don’t have a degree, so aren’t earning as much.’’

The Higher Education Contribution Scheme (HECS), introduced by the Hawke-Keating Labor government in 1989, marked the end of free university education.

It was rebranded the Higher Education Loan Program (HELP) in 2005.

The Higher Education Contribution Scheme (HECS), introduced by the Hawke-Keating Labor government in 1989, marked the end of free university education.

It was rebranded the Higher Education Loan Program (HELP) in 2005.

How much will you pay for your degree?

The federal government subsidises university degrees for Australian students, who are required to pay a “student contribution’’ for each year of study.

The contribution for study units taken in 2024 has risen 7.8 per cent, to a maximum of:

$16,323

Law, accounting, administration, economics, commerce, communications, society and culture

$12,720

Medicine, dentistry, veterinary science

$8948

Engineering, surveying, environmental studies, science, pathology, allied health, built environment, computing, visual and performing arts, professional pathway psychology or social work

$4445

Nursing, education, English, mathematics, statistics, Indigenous and foreign languages, agriculture, postgraduate clinical psychology.