New Engineers Could Be in Debt for 25 Years 3

Tuesday, June 10th, 2014
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A new study has found that proposed changes to Australia’s tertiary education system could leave engineering graduates paying off their tuition fees until well into their 40s.

The latest modelling by Australia’s tertiary sector indicates that the Abbot government’s proposed changes to higher education will result in surging tuition fees for engineering students and a potential long-term debt burden once they graduate.

Research conducted by Universities Australia, the peak body representing the country’s tertiary sector, indicates that future engineering students will be left with an education debt of as much as $113,170 once their schooling concludes, assuming additional fees of $23,923 are heaped upon the current tuition rate of $37,319, and interest is charged at a rate of four per cent, resulting in further payments of $51,928.

The scenario posited by Universities Australia (UA) assumes that a “medium fee” level is maintained following de-regulation – approximately halfway between the higher fees paid by international students and the minimum fees that universities must levy in order to make up for the proposed reduction to the commonwealth contribution for Australian students.

According to UA’s models, budding engineers may be left paying their education debts for as long as a quarter of a century, assuming that future graduates enjoy an initial income of $56,000, rising to around $90,000 following 13 years in the full-time workforce.

This compares to the 18 years it currently takes graduates to repay their Help debt of nearly $50,000, with indexation at the consumer price index.

Universities Australia has urged the Abbott government to reconsider the proposed changes to the interest terms for student loans, as well as a cut to commonwealth contributions which is expected to be 20 per cent on average.

Belinda Robinson

Belinda Robinson

Belinda Robinson, the chief executive of Universities Australia, said the changes “could be expected to result in students facing debts and longer repayment times than needs to be the case in a more competitive fee-deregulated environment,” with ramifications for family formation later on in life.

“This modelling shows that parents taking time out to work part-time to raise children would be particularly hard-hit by the new arrangement,” Robinson said.

Not everyone in the tertiary sector accepts UA’s conclusion, however, with the University of New South Wales censuring the modelling as failing to properly address the differences in cuts to various disciplines, making it difficult to predict the extent to which fees will change.

The Group of Eight, comprised of Australia’s leading tertiary institutions, has also come out in support of reform, with executive director Michael Gallagher stating that the current state of education in Australia was not viable, and that opponents to change would likely “find themselves on the wrong side of history in resisting efficiency improvement and innovation.”

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  1. Grant Spork

    The move to de-regulate university fees is very alarming, when calculating the return on a degree, Mr Pyne and the LNP, have not recognised that Federal government policies make continuity of employment a rare occurance. (The preserve of the self employed who may not make a profit for years in a recession) Each time a professional is "Under Deployed" most do not seek welfare, they go backward and must have several good years to make this up. Architects for instance will have to live untill they are 125 years old to pay off their university education, perhaps they can off load their debt to their children? Without continuitiy in prosperity the dividend of an construction education is questionable. The benefits of an education are overblown!

  2. Robo

    I find it amusing that a conservative LNP of today is alienating the professionals of tomorrow who would most likely would have been the voting base of the conservative LNP of "tomorrow". Get "tomorrows generation" to pay for the lazy taxation collection and tax deduction excesses given to some groups of today.

    The LNP should be cracking down on the very generous self managed super funds, family trusts, negative gearing on old housing stock which does nothing at all, offshore tax minimization schemes of big business and high-income earners

  3. Paul Malcolm

    This is very alarming considering we need more engineers now more than ever. I do hope there will be a better remedy to this problem and it should be quickly resolved. Otherwise, what will happen to the future of Australia?