You Can Relax Now, Your HECS Debt Isn’t Going To Skyrocket After All

Remember that Budget thing that went down a few months ago that no one was terribly happy with (other than the blokes who wrote it)? It turns out that if somethings looks like a bad idea, feels like a bad idea and smells like a bad idea, chances are someone with a bit of know-how is eventually going to recognise that it’s a terrible freaking idea.

One of the terrible ideas contained in the budget appears close to being scuttled by the Abbott Government. Under the original plan, the interest your HECS Debt acquires was going to be realigned with the Government Bond rate, which is significantly higher than the original rate of interest – that being in line with the inflation rate.
Education economist Bruce Chapman – henceforth to be known as an absolute bloody legend – ran the numbers on the Government’s original idea, and the results were not pretty. The research found that poor graduates could end up paying 30 percent more for their education than graduates on higher incomes.
The report concluded that the Government’s proposed plan was disproportionately unfair to poorer graduates, with women who take time off work to have children the hardest hit.
The modelling found that the lowest 30 percent of income earners would end up having to repay $105,000 from a starting debt of $60,000. But on the other hand, the top 25 percent of income earners would only end up paying $75,000 from the same starting debt.
Professor Chapman stated of the scheme, “Using the long-term bond rate will be regressive and it is very hard to argue this is fair. HECS was designed to protect people who go to university but, because of bad luck or bad circumstances, don’t get to enjoy the benefits.”

“HECS should act as an insurance mechanism and that aspect of the scheme is being undermined.
The report contains two alternative methods of realigning interest that deal more directly with inequity, and has been backed unanimously by the nation’s University Vice-Chancellors.
When asked about the recommendations, Education Minister Christopher Pyne essentially assured everyone that Professor Chapman was a solid bloke who is good at his job, without offering any meaningful comment to the issue – as he is wont to do.
Photo: Lisa Maree Williams via Getty Images.

via SMH.