NTEU comments on proposed cut to HECS upfront discount
NTEU Media Release
DISCOUNT ON UNI FEES TARGETED TO IMPROVE BUDGET BOTTOM LINE
5 May 2011
The National Tertiary Education Union (NTEU) today said that a decision to reduce the discount that students receive for paying their HECS fees upfront will significantly increase the cost for those students who continue to pay upfront by up to $500 per year, discouraging students from electing to pay their fees upfront in the future.
As part of the annual round of pre-Budget leaks, it has been widely reported in today’s media that the Commonwealth Government is proposing to reduce the discount that domestic undergraduate university students receive for paying their university (HECS) fees upfront.
When the upfront discount was first introduced, students who paid their HECS fees upfront where eligible for a 25% discount. This was later reduced to the present discount level of 20%. Now there are reports that next week’s Budget will see this discount reduced again, to a 10%.
“Most people would think that this would increase the cost of university education to the Government, because fewer people would pay upfront and more people would elect to defer the repayments of their HECS debts. However, because of the vagaries of national accounting, this would actually save the government money and improve the Budget bottom line,” NTEU National President Jeannie Rea said today.
For example, “Amy” has chosen to study accounting at an Australian university, the annual HECS fees for which are $9,000. If Amy elects to defer the payment of this fee through HECS until she earns sufficient income, the Commonwealth will in effect loan Amy the $9,000 and pay it to the university on her behalf. However, because this $9,000 is a loan, it does not count as expenditure for the Budget accounting purposes.
If on the other hand Amy chooses to pay her fees upfront, she would receive a 20% discount, and would pay the university $7,200. The Commonwealth would then make up the shortfall ($1,200) and pay this directly to the university. Because this $1,200 will not be repaid, it does count as expenditure for the Budget accounting purposes. The irony is that the Government is worse off in budgetary terms if Amy chooses to pay upfront.
“The NTEU would see this as little more than a financial ‘smoke and mirrors’ exercise designed to reduce expenditure, unless the Government can clearly demonstrate the savings are being used to improve access to higher education for students from disadvantaged backgrounds in the form of better student income support or more generous student scholarships,” Ms Rea said.
“The NTEU would also remind the Government of its election commitment not to increase HECS and that the additional funding needed to sustain an internationally competitive university sector has to come from the government and not as an additional cost on students,” Ms Rea concluded.
For further information and comment:
Jeannie Rea, NTEU National President, 0434 609 531
Paul Kniest, NTEU Policy and Research Co-ordinator, 0418 170 622