From 1 July 2019, the minimum HELP repayment threshold will be lowered to $45,881 per annum, with a one per cent repayment rate. While you might have already heard about these changes, don’t panic just yet—there’s a lot more to them than meets the eye.
The basics and the background
Changes to the threshold come as part of the Higher Education Support Legislation Amendment (Student Loan Sustainability) Act 2018 (the Act), which was announced as part of the 2017-18 Mid-Year Economic and Fiscal Outlook and both houses of Parliament in August last year.
While the new threshold is pretty low, if you’re earning $45k a year, you’ll only be repaying around $9 a week.
In 2017-18, if you were earning around $55k a year—which was then the minimum threshold—you were paying around $86 out of your fortnightly wage; currently you’d be paying half of that. Considering that most graduates will be earning $45k to $55k, these changes might save you some money.
Additionally, repayment thresholds will be changed so that they are indexed using the Consumer Price Index (CPI) instead of Average Weekly Earnings (AWE), which means that repayment requirements will be adjusted in line with the cost of living.
Data Source: ATO
Thoughts from the EVP
The Curtin Student Guild’s Education Vice President (EVP), Hana Arai, has noted that she’s heard mixed opinions from students regarding the HELP threshold changes.
“On one hand, those earning over last year’s threshold will have a lower repayment rate than previous years. On the other hand, [some students] will have to start paying back their HELP prematurely compared to previous years,” said Hana.
Hana noted that these changes could disproportionately affect particular student demographics, like those with dependants, or students living away from home.
“On face value it seems like a fairly small change. But looking at the big picture, the HECS (Higher Education Contribution Scheme, now HELP) repayment threshold has dropped around $10,000 in only two years, which to me, signals a worrying trend of the government looking for money in the wrong places,” said Hana.
Hana reflected on education in the 1980s, when the Commonwealth funded university education for all Australian citizens. Even when HECS was introduced, in 1989, the required student contribution was just $1,800, which would be $3,810.10 now (according to the RBA).
“Since [the introduction of HECs], the amount that students are charged to access a tertiary education has done nothing but increase, with significant blows in 1997, with the introduction of the three-tier HECS bands, and in 2005 when the Howard government allowed universities to increase HECS fees by over 30 per cent. Today most students end up over tens of thousands of dollars in debt.”
The state of higher education
Should university education be free?
Many people think not, questioning the affordability of free education for all. But when education is considered “too expensive”, what does that say about the priorities of our government?
From Arai’s perspective, the Coalition seems to have no qualms “handing over [cash] in the form of tax cuts for the wealthy and buying billion-dollar defence submarines and warships”, but when it comes to educating society, the money pool apparently dries up.
In an article titled “Why we are fighting for free education”, April Holcombe states that higher education in Australia has never been worse.
“Government funding is low by OECD standards, class sizes have ballooned and Centrelink payments are 50 per cent below the poverty line. International students pay upfront fees of tens of thousands of dollars and often work for less than the minimum wage, showing the ruthless profit-making logic of education policy.”
She notes that although university education is our country’s third largest export, the profits reaped from Government never seem to be enough; “they always want more”.
Pointing to the trimester model that is currently making the rounds in Australia (much to the dismay of students and teachers alike), April notes that education is becoming increasingly about profit, and at the end of the day, students are footing the bill.
“As the price of education increases, it falls more and more on the shoulders of individual students, who have to pay back their debt sooner,” Holcombe notes—and she’s not wrong.
The funding freeze continues
In a piece for the ABC, Ian Verrender proposes that higher education is “failing our youth”, noting that the 2019 Federal Budget was devoid of anything that would change the nature of our education system from a profit-driven export industry, and shift it back to its original purpose: “institutions for higher learning to equip Australians for the future.”
In last year’s mid-year budget, it was announced that there would be a new freeze on research funding and PhD scholarships—$328.5 million worth of funding cuts over four years. The freeze began with the abandonment of the Coalition Government’s higher education reform package in late 2017 (under Turnbull), which saw the value of Commonwealth Grants Scheme (CGS) funding freeze at 2017 levels in 2018 and 2019.
The issue with freezing funding—or at least a small part of it—is that universities need to rank highly in order to attract international students (who pay three times what domestic students pay, upfront). Among other things, rankings are achieved through research. Verrender proposes that this very strategy—which promotes university education as an export—is undermined by the continued federal cuts to education.
Impacts on campus
Here on campus, an argument could be made that the national funding freeze is part of the reasoning behind recent staffing cuts.
In April this year, only a few weeks into the semester, students from the Western Australia School of Mines (WASM) were faced with the loss of their teaching staff, who were made redundant.
While the Guild EVP has met with the Head of School for Minerals, Energy and Chemical Engineering to discuss how Curtin can minimise negative impacts to students, the University is yet to provide a reason for the staff layoffs.
In her statement, Hana said that this decision has led to other staff being overloaded with additional work, and noted that some of them had requested to take stress leave as they were overwhelmed with the extra workload.
“This will certainly impact on the quality of teaching provided to students,” said Arai.
To make matters worse, the impacted students were neither consulted with nor appropriately informed about the staffing changes, with many students still unsure about what impact the cuts will have on their education.
More generally, we have heard that it is not uncommon for teaching staff to be overloaded with work, with time restraints leading to the outsourcing of marking to individuals not involved with the unit.
These cuts, which could be interpreted as efforts to cut costs, could be a result of the University’s financial position.
Curtin University’s 2018 Financial Report showed that their total income from continuing operations was down by 42.5 million from 2017, with total expenses going up by 10.6 million. The result of lower income and higher expenses meant that Curtin’s net position was down 53.1 million compared to the previous year—not a great year.
But education shouldn’t be about profit.
The case for free education
Over the last fifty years the nature of the Australian workforce has changed dramatically.
Before the 1960s, the expectation was largely that women would stay at home while men went out into the workforce. Since then, women’s workforce participation rates have skyrocketed. The late ‘90s saw the country make the transition from being primarily a producer to an economy with a large manufacturing base; now, Australia’s market is comprised of trade, services, financing and manufacturing. The rise of trade unions boomed in the ‘60s, only to diminish in recent years; women became half of the workforce (though they still earn less); and our economy developed a large dependency on the mining industry—our top two exports are iron ore and coal. But none of this matters without the people who participate in the workforce.
And if our workforce is set to change again, now that the mining industry has transitioned into the production phase, and technology is becoming increasingly integrated into the workplace, shouldn’t we be investing in our people? Shouldn’t we be ensuring that they’re provided with the education, tools, and resources to be able to face the workforce of the future?
As automation becomes more commonplace, the university and vocational training sector will need to be able to provide us with the skills we need to take part in Australia’s changing workforce—how are they supposed to do that when they’re worrying about funding cuts and cost-savings?
Education matters, not just because it leads to better economic outcomes, but because it can improve health outcomes too.
Educational attainment is one of the determinants of an individual’s health and well-being; better education leads to better health. Some studies show that individuals with higher education enjoy better employment outcomes, which in turn leads to better health outcomes, through increased access to healthcare, reduced income-related stress, and lower income volatility.
Spending on education
If more education leads to better economic and health outcomes for society, why aren’t we investing more in education?
Australia’s total investment in education is above the OECD average, coming in at 6 per cent of GDP, but this includes both private and public spending. While private spending (which includes spending by families and students) on tertiary education is one of the largest amongst OECD countries, public expenditure—as a percentage of total public expenditure—is comparatively low.
In 2017, Australia’s expenditure on educational institutions was 5.8 per cent, which is above the OECD average, however only 3.9 per cent of that was public expenditure—the rest was private. Australia has one of the smallest shares of public expenditure on primary, secondary and post-secondary non-tertiary educational institutions among OECD countries.
In the 2018 Global Wealth Report, Australians were rated the wealthiest people in the world, yet in 2017, we were ranked 39 out of 41 high- and middle-income countries, in terms of achieving quality education.
So why have fees for Bachelor’s and Master’s programmes increased by 17 per cent and 16 per cent, respectively, in the last ten years?
Why are our annual domestic student tuition fees for bachelor’s or equivalent programmes among the highest of the OECD countries?
And why is spending on education as a proportion of all government expenditure decreasing?
Cartoon by Mark David / @MDavidCartoons
Moving forward
A strong tertiary education system is an integral part of our economic future, and for the outcomes of the individuals that live within our society.
While I haven’t jumped on the ‘free education’ train just yet, it is clear that the goals of our universities, and the educational priorities of our government, need to be re-evaluated. In commercialising higher education, we risk destroying its purpose, and instead lead universities to pursue commercial goals that jeopardise the outcomes of students.
The goal of education is not to compete in business or make profits, it is to prepare the individuals that participate in our society, to help lead our society. When universities lose sight of that, when profit becomes a driving part of the equation, not only does it destroy the trust between students, teachers, and universities, it minimises the value of education.
Want to check your HELP debt? Your myGov account will be able to show you how much you owe and any repayments that you’ve made. If you don’t have a myGov account, I would recommend setting one up—it’s a one-stop shop for Medicare, the ATO, Centrelink, and a range of other Government services. You can set one up following the instructions on the ATO website.