The Senate’s Education and Employment Legislation Committee is inquiring into Senator Mehreen Faruqi’s (Greens NSW) bill to abolish indexation and raise the income threshold for repayment of study loans
“While, ideally, all student debt should be wiped, this bill is a clear and immediate step to start tackling the student debt crisis while providing cost of living relief to those with a study loan as we work towards the abolition of all student debt and a future where TAFE and university are free for all,” Senator Faruqi told the Senate in November.
Submissions to the inquiry include Independent Higher Education Australia and Independent Tertiary Education Council Australia which oppose the 20 per cent additional charge on original loan amounts their students pay.
But Ann Martin-Sardesai (CQU), James Guthrie and John Dumay (both Macquarie U paint the biggest policy picture, arguing the original premise of income-contingent debt repayment, that graduates would only pay debts. “when they began earning a comfortable income,” no longer functions, due to “significant changes in government policies.”
They point to the previous government’s Job Ready Graduates Package which increased student fees by 27 per cent for law, economics and business related courses and 113 per cent for communications and humanities.
But their all-encompassing arguments are against tying student debt to the Consumer Price Index.
For a start, they warn if the June CPI hike is 8 per cent (the inflation figure for HECS now is 3.9 per cent now) it will, “blow out the Australian student debt.”
And they add that, “the financial argument for tying debt to CPI is fatally flawed,” because the government uses tax receipts or bonds to finance the payments it makes to education providers but students may take a decade to pay Canberra back. “If you invest $100 today that money can earn interest or dividends, which should not apply to government cash raising or funding or student debt.”
The committee will hear from as yet unannounced witnesses on Friday.