Interest free tertiary education in Australia

A reader, Lachlan Wells, wrote this to me:

There is a system used here in Australia called HECS which is similar to what the named economist proposes except that you only pay what your degree is worth. The government loans you the money interest-free (but CPI indexed) and pays your entire tuition. After you reach a certain income threshold a percentage of your after-tax income is deducted from your pay to start paying off the debt.

This internalises a few issues that exist with the model you propose. Chiefly, if you are going to pay 4% of your income for life, you may as well go and study all the time and only have a crappy job on the side (at least that is what I would do since I love learning: if you are paying already, it is an incentive to get your moneys worth!). Also it is a government loan and not a loan through the university itself, so it can be deducted from income directly alongside income tax (so no messy tracking of income) and the money is not geared to any particular major (if it is an Arts degree in philosophy or an Engineering degree in microelectronics, the degree is paid for by HECS, so the university gets the funds it needs without the incentive of only churning out higher income degrees).

HECS is at least one thing I believe our government got right; most government programs have more faults than positives!

That was a response to the article I wrote on debtless university education. Thanks Lachlan for sharing the information.

So this HECS is Higher Education Contribution Scheme. As I understand it, it’s been replaced with HELP, Higher Education Loan Programme. But it’s also apparently listed as HECS-HELP, so take note.

The criteria to apply for HECS-HELP assistance is that

you are a Commonwealth supported student and

* an Australian citizen or
* the holder of a permanent humanitarian visa.

This university education tuition fee thing seems to be getting worse. It turns out that Britain’s plan to triple their tuition fees got a whole bunch of students and teachers riled up.

Disclaimer: You are advised to contact the appropriate authorities on relevant, up-to-date information. Criteria for application, loan repayment conditions and other nitty gritty details might change.

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