Nineteen years ago, the Howard Government introduced reforms to the HECS system that gave universities sovereignty over their fees, up to a ceiling set by the government. The theory was that the change would create competition between universities and that students would opt for the lowest fees. In reality, every university immediately increased its fees to the ceiling, instantly creating a national 27.6% increase in university fees across a single year.
The reforms also brought in regulations that university fees and HECS debts would rise annually in line with inflation. In reality, the rise in fees has rarely mirrored the actual inflation rate. Indeed, over almost 20 years, the fee hike has aligned with the national rate of inflation only five times.
Across the two decade span, these reforms resulted in the cost of degrees increasing exponentially and the amount of debt accrued by students by the end of their degrees becoming financially crippling. Figures show that students are starting their working life with a debt burden 30% will never pay off.
Students were short changed again in 2021, when the Morrison Government introduced its Jobs Ready Graduate Program (JFR). Under this scheme, the cost of humanities and communications degrees increased again, this time by 117%, while the cost of STEM degrees decreased by 59%. The theory was that this cost structure would encourage more students to take on unpopular, but necessary, degrees. As it transpires, however, art history majors do not just change to mechatronic engineering on a cost factor basis. News site ‘The Mandarin’ found degree enrolments only changed 1.52% as a result of the structural changes due to low price sensitivity.
If we want an example of what has happened to students since the reforms, look at the cost of today’s humanities degrees. In 2004, a humanities degree at the University of Sydney cost $3,768. Today it costs $16,320. This is an increase of $12,552 — or 333%. If the cost of degrees had genuinely increased only with the rate of inflation, an arts degree should now cost $6,268.73. The discrepancy is $10,051.27.
Vice-chancellor of USyd Michael Spence spoke out against the Morrison fee rises in 2021, stating they “punish students for choosing to study the social sciences and humanities when the best research suggests that a broad education, and many of the core skills that these disciplines offer, will most future-proof our students with the skills in critical thinking”.
Yet, the Bill passed and USyd increased the fees of humanities studies.
The changes to the rules has resulted in huge revenue for allAustralian universities. According to 2022 USyd financial statements, the university recorded an operating profit after income tax of $250.9 million. Domestic students contributed $401 million to revenue in 2022.
The question must be asked, is there a need for this huge amount of revenue? If in 2022, the price of degrees for domestic students was reduced by 62%, the University would still have recorded a profit. As their 2022 report states, ‘the University is a not-for-profit entity and re-invests all available revenue into enhancing research and teaching capabilities.’
Why not reinvest that into lowering fees? The quality of education would no doubt improve if students had fewer work commitments outside of studying while they also coped with paying rent, buying food, textbooks, student services and amenities fees in the midst of a cost of living crisis.
The Federal Government should also be held at fault. At the hands of their fee ceilings, total outstanding HELP debt has risen from $12.40 billion in 2006 to $74 billion by 2023.This is while the Australian Government is collecting $4.94 billion annually from HECS/HELP.
The annual indexation of HECS fees ‘in alignment with inflation’ continues is a policy myth. In 2023, partly due to soaring cost of living/inflation pressures, HECS debt increased by an indexed 7.1%. This meant people earning less than $112,985 (84% of all earners in Australia) saw their net HECS debt rise by year’s end – the 7.1% bump was greater than the annual repayment.
The amount of debt has obviously become crippling for graduates.The number of people owing more than $100,000 in HECS debt has increased from noone in 2010 to 27,238 in 2020. The average time taken to repay debt has increased from an average of 7.3 years in 2006, to 9.4 years in 2020. With the cost of fees moving higher, less than 10% of student contributions are now being paid upfront.
Australian students are being truly crippled by a system that is stacked against them.
