As inflation continues to spiral out of control, university students woke up yesterday morning to the news that HECS-HELP degree debts were indexed by a whopping 7.1 per cent. For some students, that means facing 44 years of debt repayment.
The new report, titled “The Future of Graduate Debt in Australia,” by the National Tertiary Education Union (NTEU), revealed that under current policy settings, repayment periods for certain degrees could exceed four decades.
As of 2022, more than 3 million Australians collectively owe $74bn in student debt, which is four times the amount students owed in 2009. Thanks to today’s massive spike in HECS-HELP indexation – the highest in decades – that number is expected to balloon to more than $80bn.
While remaining an ‘interest-free’ loan, this growing debt is susceptible to the rising tide of inflation – bringing into question the affordability of higher education in harsh economic times as graduates remain trapped in debt for decades. Plus, their debt amount will also have an impact on borrowing capacity for future homebuyers.
Rising student debts create decades of repayment stress
The average student debt is now at $24,770 per student, up from $15,191 in 2012. Students currently take an average of 9.5 years to pay off their degrees, compared to 7.3 years in 2006.
Many four-year degrees could end up costing more than $100,000 once debts are repaid. The study indicates that graduates with a Business Management degree are likely to be the worst affected, with a staggering repayment period of 44 years, totalling $119,331.
“A barrier to equality”
The report, compiled using data from across the sector, also showed a combination of newly increased course fees under the Jobs Ready Graduates Reforms and reduced repayment income thresholds that were hurting student wallets.
NTEU National President Dr Alison Barnes said the findings painted a “startling picture” of the current state of tertiary education.
“We are seeing students who may be paying off their debts for the majority of their working lives,” Dr Barnes said. “This is not what higher education should look like. It’s a barrier to equality, which must be a core principle of our universities.”
Dr Branes also pointed towards growing debt disproportionately affecting young people and women, claiming the rise only compounds entrenched inequality.
According to the report, the female-dominated fields of Humanities and Social Sciences Honours degree could take 40 years to repay at the cost of $110,353. Female law graduates could also take up to 36 years to pay off their qualifications, four years more than their male counterparts.
Despite the lack of action by the government to ease the burden of indexation, Dr Barnes remains hopeful that they can work with the federal government to tackle the issues facing universities and students.
A call for change
Eight MPs and senators penned an open letter to Education Minister Jason Clare and Anthony Albanese, pleading with the officials to take immediate action.
“We stand ready to support legislation which achieves this end,” they wrote in their joint letter sent on Monday.
Signed by Tammy Tyrrell of the Jacqui Lambie Network, The Greens’ Mehreen Faruqi and independent Lidia Thorpe, the letter to Mr Clare and Mr Albanese cited “larger debts” taking too long to pay off, forcing students to carry a lifelong financial burden.
The letter was also signed by independent MPs Helen Haines, Dai Le, Andrew Wilkie and Sophie Scamps from the lower house.
The National Union of Students is also calling for urgent federal government intervention, asking Labor to immediately freeze HECS-HELP indexation to ease the financial blow on students.
While student debt has risen across the board, not all repayments are set to increase. Under the updated thresholds, graduates with higher education loans will be able to earn slightly more before they start making repayments.
Graduates now won’t be forced to make repayments until reporting an annual income of $51,550 or more, up from the previous amount of $48,361.
