Student Financial Contributions, Financing and Operations

1. Student Financial Contributions, Financing and Operations Caroline Perkins Australia

2. Outline • Higher Education Loan Programme (HELP) • Background • Recent changes • Student borrowing and debt repayment • Student assistance and participation from low socio-economic groups

3. Higher Education Loan Programme - HELP • Introduced in 1989 as the ‘Higher Education Contribution Scheme’ (HECS) mainly for undergraduate study • 1997 – Differential HECS • Revamped from 2005 as the Higher Education Loans Scheme (HELP)

4. HELP - KEY FEATURES • Assistance for tuition costs • Separate system for assistance with living costs • Non means-tested entitlement • Interest-free loans and discounts for up-front payment • Income-contingent repayment with indexation of loan balance and bonuses for faster repayment

5. HELP LOAN TYPES • HECS-HELP - for Government subsidised university places (mostly undergraduate) • Loans and/or 20% discount for up-front payment of ‘student contributions’ (including part payments) • 75% of eligible students take out a loan • Student Learning Entitlement limit (generally 7 years equivalent full-time study).

6. Resourcing amounts per equivalent full time student load (2008 estimates), prior to 2007-08 Budget

7. New Cluster Funding Arrangements Announced in 2007-08 Budget • Decrease in funding clusters from 12 to 7 • Increased Commonwealth funding for: • Mathematics and Statistics ($2,729; 49.7%) • Behavioural Science and Social Studies ($840;11.4%); • Education ($109; 1.3%); • Allied health ($1,889; 23%); • Clinical Psychology ($2,729; 37%); • Nursing ($109; 1%); • Engineering, Science and Surveying ($684; 5%); • Medicine, dentistry and veterinary science ($1,081; 6.3%).

8. New Cluster Funding Arrangements Announced in 2007-08 Budget • Funding for accounting, administration, economics and commerce aligned with the Commonwealth contribution for law ($1674 in 2008, down $1083 from $2757). • Accounting, administration, economics and commerce will move into the same HECS-HELP band as law (maximum $8498 for 2008, a rise of $1239 from $7259).

9. New Resourcing Amounts (2008 estimates) (per equivalent full time student load)

10. Private rates of return and gain in lifetime earnings for 4 disciplinesBorland, J: New Estimates of the Private Rate of Return to university education in Australia, Melbourne Institute Working Paper No14.02, July 2002.

11. HELP LOAN TYPES • FEE-HELP – for domestic fee-paying students (mostly non-research postgraduate at public universities and undergraduate/postgraduate at private higher education providers) • $A80,000 (≈$US62,800) lifetime limit generally and $A100,000 (≈$US78,500) for dentistry, medicine or veterinary science degrees • 20% loan fee for undergraduate courses

12. HELP - KEY FACTS • Loans in 2005-06 • $A2.1 billion (≈$US1.6 billion) • Persons with a HELP debt • 1.2 million • Total debt outstanding • $A12.4 billion (≈$US9.7 billion) • Average debt • $A10,400 (≈$US8,200) • Average repayment time • 7.4 years (for fully repaid debts) • Debt not expected to be repayable • 18% of total outstanding debt, $2.4 billion (12.4% of debt on completion)

13. Accumulated HELP debts and doubtful debt 1989-90 to 2005-06

16. Taxation System • Repayments are through the Taxation System • Integration with tax payment system • Integrated with tax compliance system • Students provide Tax File Number (unique lifetime identifier) at time of application • Loan data are transferred electronically to taxation office • Compulsory repayments are added to income tax assessment

17. Taxation System • Payments are deducted from salary • Voluntary repayments to taxation office • Loan default is not possible unless a person is a tax avoider • All of the tax compliance processes apply • Criminal penalties for tax evasion apply

18. Merit-based Student Aid • HELP (Tuition assistance) • Scholarships • Income Support

19. Scholarships • University Scholarships – may be targeted to students with very high university entrance scores; or to students from low socio-economic backgrounds. • Commonwealth Scholarships (about 2.5% of full time undergraduates) • Programme provides support to assist with costs associated with higher education • Targets students from low socio-economic backgrounds • Open to undergraduate students doing any course (postgraduate only for nursing and teaching) • Exempt from income assessment for social security purposes

20. Commonwealth Scholarships • Commonwealth Education Costs Scholarship - $2,120 a year (2007 prices) for up to 4 years • Commonwealth Accommodation Scholarship - $4,240 a year (2007 prices) for up to 4 years • Both available for undergraduate courses, two-year associate degrees, and one-year enabling courses for Indigenous students • $4,000 one-off scholarship for Indigenous students moving to access university

21. Income Support • Youth Allowance, Abstudy and Austudy means and assets tested for people who are studying and can’t support themselves or can’t be supported by their parents (for students under 25).

22. HELP – Tuition assistance • Increased participation following the introduction of HECS in 1989. • Benefited low socio-economic status (SES) students as well, but these students have not increased their share of domestic students. • Low SES have remained between 14.5 and 15 percent of the total number of domestic students, between 2001 and 2005. • Low SES tend to fall behind at school.