Hot on the heels of the revelation that the federal government is preparing to write-off billions of dollars of higher education loans, a Parliamentary Budget Office (PBO) analysis has revealed that deregulating university fees, as proposed by the Coalition Government, could lead to a further blow-out in bad debts. From The Australian:
New analysis shows the cost of student debt owed to the taxpayer is predicted to soar from $1.7 billion to $11 billion within a decade…
A Parliamentary Budget Office report also takes into account Turnbull government plans to deregulate university course fees, which it says will be the main driver of the growing loan portfolio.
It predicts student fees will soar by 40 per cent as universities recover costs following a planned 20 per cent government funding cut.
In addition, the PBO projects student fees will increase by two per cent every year.
The debt will be driven by those who are unlikely to repay their loans because they earn below the taxable income threshold.
Those “doubtful debts” will double in a decade to $4 billion.
The potential impacts on the Budget could, however, be even greater following university fee deregulation.
Because most welfare recipients’ payments are linked to the CPI, the inflation-rising effects of higher uni fees could have a knock-on effect on the Budget via higher benefit payments (think aged pensions, unemployment benefits, etc).
There is also the possibility that higher university fees could damage state and federal budgets by reducing enrollments in private schools.
With these facts in mind, deregulating university fees hardly sounds like sound public policy, does it?
