‘Education is a public good’: New Greens bill to scrap student debt indexation

If inflation remains at 7.8 per cent by 1 June next year, the average student debt will increase by $1847.

Source: Seth Wenig, Associated Press

Green Deputy Leader and Education spokesperson Senator Mehreen Faruqi on Thursday gave notice of a new bill to freeze all education and training loans.

The Education and Other Legislation Amendment (Abolishing Indexation and Raising the Minimum Repayment Income for Education and Training Loans) Bill 2022 will be introduced by Faruqi. The bill hopes to see the abolition of HELP loan indexation from 1 July 2022, and the minimum repayment threshold increase to the median wage from 1 July 2023.

The Higher Education Loan Program (HELP) includes four types of loans. The Higher Education Contribution Scheme (HECS) provides students with subsidised Commonwealth-supported Places (CSPs), with HELP loans covering the student contribution portion of their fees. FEE-HELP provides loans to domestic students paying full fees. OS-HELP provides loans to students enrolling to study overseas as part of their Australian degree. SA-HELP provides students with loans to pay their SSAF loans.

While the loans are interest free, HELP debts are currently indexed to CPI inflation, with this year’s indexation at 3.9 per cent, the highest in at least a decade. CPI inflation is expected to rise to 7.8 per cent by December this year. The minimum repayment threshold for HELP debt in 2022-23 was $48,361, while the median wage sat at $51,389.

The bill comes against a backdrop of rising living costs and an increase in student debt from $25.5 billion to $68.7 billion as more people have accessed higher education over the last decade.

Labor’s budget on Tuesday also did very little to alleviate the immediate financial stress for students, including a failure to increase the availability or amount of welfare payments, curb rising energy prices, or centre its Housing Accord around public housing or renters.

While student debts generally don’t impact the financial position of domestic students while studying, they have a more direct impact on recent graduates who are trying to make rent, pay bills, and finance other rising living expenses. “Study debts are impacting people’s ability to obtain loans, their mental health, their ability to save up to buy a home or simply afford to live a good life,” Faruqi said in a media release.

The bill is also part of a more aspirational goal of free education in Australia — as is common in Europe — and the abolition of all student debt. “No one should be shackled with a debt sentence just in order to study. Higher education should be free. This bill is one of the first pieces of the puzzle in making that vision a reality,” she said.

In an interview with Honi, Faruqi explained the need to reframe our understanding of tertiary education moving forward. “Education is a public good,” Faruqi said.

“It’s really interesting that we accept quite easily that school is free for everyone, but we don’t accept that same level of education at university to be provided without fees.”

Universities are more than service providers and tertiary education extends beyond the classroom through extracurriculars, activism, and rich conversations had with new friends. Helping students from all backgrounds succeed in these spaces also means providing them with the financial assistance and support structures they need.

Attaining a tertiary qualification is also becoming increasingly necessary for graduates entering the workplace, with half a million of the jobs created over the next five years expected to require university degrees. In this context, universities will play an increasing role in preparing students for the workforce.

“Students are not customers and staff are not service providers, but that’s what I have seen happen over the last 20 years,” Faruqi said.

“So the vision for universities is… where students flourish, where students have the resources they need, not just to study, but also to engage in activism.

“With free education comes the support that students need. So a guaranteed livable income. And we have said for some years that it should be above the poverty line: $88 per day.

“The Greens would definitely want to see funding for students, which is determined by students, for them to be able to have an active political life while they’re studying.”

When asked whether she thought Labor or the crossbenchers would support the bill, Faruqi explained it was early days.

“It is absolutely crucial that we make the step of freezing study debt,” she said.

“I will be having those conversations with others over the next few [days].”

The bill is set to be introduced in November — time will tell whether the Greens can muster the necessary support in the meantime.