There is a fair amount of debate going on around changes to University fee structures at the moment, including the application of an interest rate to the debt racked up through the Higher Education Loan Program (HELP). During Senate Question Time last week, the Greens Higher Education spokeswoman Lee Rhiannon posed an interesting question to Minister for Human Services Marise Payne, asking whether the plan to charge interest up to 6 per cent on existing debts as well as new ones constituted a broken contract.
The ABC put it through their fact checker and came out with a result of ‘debatable’.
It made me wonder though – would I have so easily taken on HELP debt if I was aware at the time of an interest charge? In asking that I am not necessarily against it (although 6 per cent is steep and I worry that this may put those in lower socio economic backgrounds off higher education), but am concerned that they can make this change ‘just like that’.
What do you think? Is it a breach of contract, or just of faith? Or, indeed simply a sign of the times where all must pay their way?
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What’s Your opinion?
Is the application of interest to historical HELP debt a breach of contract?
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watto23 said :
Exactly. The focus should be on whatever gets the money repaid. All else is politics.
See thats where the proposals are all wrong. the emphasis should be on getting people to repay their debt. It should be 2% of wages at a minimum on all income then scaling upwards like it does. Increasing charges will just lead to debts not being paid off. Surely a fix to the budget is to get the debts repaid. I have no issue, if someone dies and has a HECS debt, that is should be repaid from any estate the person has. I do object to making Uni more expensive. The only way we will compete in the world in the future is with educating ourselves.
chewy14 said :
This would be a practical and justifiable way of levying a “user pays” death tax. I don’t have any problem with that and there would be no objection from the people levied.
dungfungus said :
I agree and it should be extended to other areas.
How about recovering pension payments from the estate of pensioners who own property when they die?
I don’t understand why it should be the taxpayers responsibility to fund windfall inheritances.
I am surprised that mandatory collection of a HECS/HELP debt has not been standard procedure in the past. Our previous governments have been complaining about diminishing revenue while sitting on their hands.
I fully support what Christopher Pyne is putting forward.
http://www.smh.com.au/federal-politics/political-news/christopher-pyne-suggests-collecting-hecs-debts-from-dead-students-as-way-to-help-budget-20140528-394rx.html
“Better do a degree that doesn’t lead to below average wage then.”
And kiss goodbye to science degrees. Who needs all that R&D investment that pays off so handsomely?
Let’s all just buy c$%p off the Chinese and sell expensive mud.
gooterz said :
It would be ironic if an international lawyer had to act for an Australian lawyer with an unpaid HECS / HELP debt. What a moral dilemma that would be.
dungfungus said :
I’m fairly sure this would be a breach of international law if the person was a citizen of Australia. Where would they send them too?
chewy14 said :
Good point – I missed that. My apologies.
However I don’t believe there’s been anything to indicate that degrees currently costing the student in the order of $5000 per year (ie HECS-HELP) will suddenly quadruple in price.
And for those that were already paying potentially that much (FEE-HELP), an additional few percent in interest won’t make _that_ much difference in the overall repayment timeframe
gooterz said :
The simple solution to this is to bar re-entry to Australia until the debt is pain in full. I know someone who failed to pay Residency Tax in France after a previous visit and he was told he would not be able to enter France again until the debt was paid.
The net effect of this will be for those will hecs debt to find overseas jobs.
Don’t live in Australia, never pay off Hecs.
m_ratt said :
Agree that its a silly analysis but he said $20k per year of university, not $20k total debt.
m_ratt said :
Once you earn over a certain amount, though, there is no rebate. It is now means tested. It wasn’t before.
pink little birdie said :
The guy on facebook is an idiot. That’s entirely (and surely obviously?) wrong.
3% interest (which is not actually dissimilar to the current CPI indexation) adds about $600pa to the total.
4% at $50,000 is about $2000 paid off each.
At that rate, (assuming a constant $1400 net payment each year for simplicity), the debt will be repaid in under 15 years. Quicker when you remove the simplification.
Would take a bit longer at 6% interest, but still no where near 220 years.
Think about it.
4% of $50,000 per year for 220 years is $440,000 – way off for payment of a $20k debt.
banco said :
The total of outstanding HELP/HECS loans is somewhere between $25 billion and $60 billion. That is the cost of “free” tertiary education. We read of extraordinary efforts that some people will go to to avoid payment of same especially the ones that go overseas and boast about it. Those in the UK will soon have repayments deducted from their foreign income following arrangements made between the Australian and the UK governments. It’s a bit like the mentality of some retirees who organise their finances so they can draw the full pension and all the other “battler benefits” while enjoying the assets they have accumulated that are not assessed in calculating pension entitlements.
milkman said :
The 2% increments are relevant, because that is what VYBerlina is confusing with the rebate – the advertising for the Lifetime Health Cover loading being 2% for each year over 30 without cover – the age of 30 is not relevant to the rebate. VYBerlina obviously does not remember the ads clearly enough.
Although my last comment was flippant, I think it would be only fair to apply the interest to debt amounts incurred under the new system rather than retrospectively applying it to existing debts.
pink little birdie said :
OMG, and did you know that a person earning $40k per year will take an infinite numbers of years to pay it back?
Arrrrghhhhg, its the end of university I tells ya.
pink little birdie said :
Surely that’s indicative of what a great deal HECs is someone on that income will never pay back the money (assuming the calculations are correct).
pink little birdie said :
Huh? It’s a tax rebate. Once you no longer qualify there’s no rebate. It doesn’t matter about the 2% increments. When it was brought in it was non means tested, now it is.