November 15, 2013
Western Australia’s four main student guilds say they oppose a plan being considered by the new Federal Government to privatise Higher Education Contribution Scheme debt.
The plan came after new Liberal Prime Minister Tony Abbott’s recent inquiry into the state of the nation’s finances.
The privatisation would involve converting $23 billion of accumulated HECS debts into securities which would be bought by the private sector and then on-sold to investors.
University of Western Australia Student Guild President Cameron Barnes said the guild and the National Union of Students were both stridently opposed to the proposal.
“The fundamental principle of HECS is that it isn’t a loan; it’s a deferred fee.
“Privatisation will inevitably lead to it being treated more like a loan.”
Mr Barnes said he was concerned about a private company suddenly having a multi-billion dollar stake in public policy surrounding HECS debts.
He said the concern would be whether any real interest was charged and how repayments were tied to earnings per year.
“Privatisation will affect current students as well as future students because we will have tens of thousands of dollars worth of HECS debts,” Mr Barnes said.
Britain is one example of a nation that has sold its tertiary student debt as an asset.
Edith Cowan University Student Guild President Sheridan Young said the plan to sell HECS debt was not in the interests of students or the future of Australia.
“This could limit the availability of a higher education in the future to everyone.”
Ms Young (pictured right) said privatisation would create incentives for the Federal Government to increase student debt.
“If they sell the debt they will need to sell it in a way that is profitable to businesses,” Ms Young said.
“HECS was set up to ensure that higher education is affordable and available to all Australians.”
Ms Young said she would like to see the plan shelved in favour of supporting students, academics and universities to provide the best education possible.
Emma Bagg, the Student Association president at WA’s only private university, the University of Notre Dame, said privatisation might be a better, more efficient alternative to the current scheme, but might also lead to increased instability and exclusivity in the potential HECS debt “marketplace”.
“If the government privatises HECS debts, the ability to set the interest rates for the loans would fall to private investors who obviously have a profit-based incentive rather than the government’s aims of educating the masses and copping the burden for that,” Ms Bagg said.
She said this could lead to two major problems.
“Firstly, the market-based pressure of competition in interest rates could lead to greater instability for students,” she said.
“Secondly, interest rates could rise to such a point that it becomes a barrier to participation for those from low income backgrounds, particularly those who will not earn a high wage after the conclusion of their degree.”
Ms Bagg said this could include social workers, nurses and teachers.
Murdoch University Student Guild President Bec Thompson said privatising HECS would open the floodgates for higher student fees and an American-style loans system.
She said all potential affects may not be immediately felt, but any changes would be a further hit to students in addition to the tertiary funding cuts announced earlier this year.
She said changing legislation would take time.
“I expect the National Union of Students, as we have already seen, will continue to lobby against privatisation of HECS,” she said.
Curtin University Student Guild Education Vice President Sam Cavallaro said the government’s talk of privatising HECS underpinned an overall agenda of austerity.
“It will make the prospect of a university education impossible for a growing layer of people,” Mr Cavallaro said.
“It is most likely that the only way for the government to make this privatisation scheme economically viable is for private debt collectors to increase the interest rates on HECS.”
Mr Cavallaro said privatisation would create insecurity about the salary threshold on repayments.
Currently the compulsory repayments threshold is set at $51,309, which is 70 per cent of the average Australian’s yearly income.
WA Education Minister Peter Collier said he was mindful the new Federal Education Minister Christopher Pyne had already raised a number of points relating to higher and international education.
“I await to see what firm policy positions will be taken in the coming months,” Mr Collier said.
Photos: Kyra Klaasen