With HELP bad debts currently standing at around $50 billion, the federal Education Department will work with the Australian Taxation Office (ATO) on matching tertiary courses with income and employment outcomes. The stated intent is for this information to help assist prospective students with course choices. However, Andrew Norton of the Grattan Institute says this information could also be used by the federal government to make it harder for students to access the Higher Education Loan Program for courses that have poor employment prospects. From The AFR:
Mr Norton said much of the government’s focus had been the risk of non-payment in the vocational education and training sector. Here courses are cheaper, but debt quickly mounted when the previous Labor government extended income-contingent HELP loans to the sector…
The government might be inclined to extend that thinking to higher education, especially if the ATO analysis provided empirical evidence about the riskiest borrowers, Mr Norton said.
“There are some higher education disciplines, especially the humanities and creative arts, that on other data sources look like they will have high bad debt,” he said…
The overall student loan debt owed to the government has grown rapidly from $25.5 billion in 2011-12 to about $50 billion now, prompting concerns about its long-term viability…
“Taxpayers are currently footing a bill of around $50 billion in student loans and unless something changes, we’ll have to write off around a quarter of that debt,” [Education Minister] Senator Birmingham said in a statement…
Enabling students to ascertain whether an area of study is likely to lead to meaningful employment is worthwhile. It’s also useful information for the government, so that it can reduce funding to spurious courses with little employment prospects, just as it has done in the private vocational education and training (VET) space.
That said, a bigger issue that needs reform is the demand-driven university system. For mine, this uncapping of university places is the greatest policy blunder and the biggest driver of the current problems afflicting Australia’s university system. It has facilitated a form of ‘quantitative easing’, whereby the universities have lowered entrance scores and printed as many degrees as possible to accumulate Commonwealth government funding through HELP/HECS loans, as well as sell as many degrees as possible to foreign students.
The end result is that the universities have flooded the market with so many graduates that a university degree has lost its value, despite the significant cost to both students and the Budget.
Given the abject failures of the demand-driven system, I believe that policy should first and foremost look to restrict federal funding and adopt a merit-based system that rations the number of university places based on a detailed assessment of the economy’s needs.
