Tuesday, February 28, 2006

The Centre for Independent Studies has released a paper calling for reform of university student fees system. The paper, authored by Andrew Norton, argues that the cap on loans to full fee paying students is too low. The current cap allows for loans during a lifetime of AU$50,950.

“Setting the FEE-HELP limit at this amount biases the market against courses that are long or have high per year costs, or both,” argues Norton in the paper. “The loan cap is a crude way of controlling lending, taking no account of course costs or capacity to repay.”

According to Norton, this undermines student choice and competition. He argues that the system should function more like commercial lending.

“A truly radical reform would make student loans mimic commercial loans: students with good earning prospects could borrow large sums, other students could borrow less, and some could not borrow at all,” he said. “Instead of denying or limiting loans to people doing high cost courses, as now occurs, the government could deny loans to people who are unlikely to repay.”

The paper was criticised by Senator Kerry Nettle, Education Spokesperson for the Australian Greens. She argued that the changes would mean an increase in costs to students already struggling to pay, and called on Education Minister Julie Bishop to rule out the changes.

“To consider refusing loans to those deemed less able to repay would further cut off higher education for Australians from low socio-economic backgrounds,” she said. “Julie Bishop should use her address to the National Press Club tomorrow to rule out any moves to further deregulate the HECS system.”

“Student fees have spiralled upward under the Howard government and any further deregulation would just make a bad system worse,” she added.