President of the National Tertiary Education Union Jeannie Rea says the budget is “unworkable” and will “devastate” the higher education system.
“I think we’re in a real moment of fundamental change to higher education in Australia,” she told Catalyst. “It will ruin it as we know it.”
Dr John Vaz, the program director for Finance at Monash University, says there are two major changes impacting university students in the budget.
“The two main things are higher fees and constraints on how long students can hold a debt with the government,” he said. “One revolves around the HELP system, specifically how early people have to pay back their loans. The other aspect of it is the ability of the universities to charge fees based on what they believe they can obtain from the market.”
Under the budget, university fees will be deregulated from 2016, meaning universities will be free to decide what to charge students for their courses. In his address to parliament, Hockey said these changes will lead to a more efficient education system.
“With greater autonomy, universities will be free to compete and improve the quality of the courses they offer,” he said.
“The government will expand the demand driven funding system for higher education courses from 1 January 2016, and seek to share costs of higher education more fairly,” the budget reads.
These changes are expected to save up to $1.1 billion over three years.
Rea says deregulating universities will lead to significantly higher fees and will increase the economic divide.
“Don’t think for a minute they won’t do it, the universities will just charge as much as they can,” she said. “Prestigious courses and universities will just compete on upward prices, but then we’ll also see the other side of it, with universities trying to undercut each other on price. We’ll get very rapidly a real distinct divide between the rich and poor institutions and courses.”
University students will also begin to pay back their HECS debts soon, with the income threshold reduced by 10%, from $53,345 to $50,345. The government’s funding of new student places will also be reduced by 20%.
Interest on these loans will now be based on the government bond rate, rather than inflation. This is estimated to lead to graduates paying an interest rate of around 6% on student loans, up from 2.9% currently.
These changes to the student loans schemes are expect to save the budget $3.2 billion over four years.
Dr Vaz says this could deter people from studying at a university.
“It means that depending on the capacity of individuals, they may think twice about going to certain universities if these certain universities put up fees,” he said.
Govt has decided to deregulate fees, unis will decide how much you pay – leaving students out in the cold #may21protest#2014Budget
Rea says the budget changes are of particular concern to VCE students and their parents.
“I suspect there’s a whole lot of households where kids are currently doing their VCE in anticipation of going to university, and their parents will be turning around and thinking about the levels of debts they’ll be facing.
“The government will keep talking about the Commonwealth-supported places as government money but of course it’s not on their changes now. Students will be paying more than half of that.
“People will start to get really scared about whether it’s worth committing to the levels of debt they will be facing. It’ll mean that people won’t be choosing their courses on the basis of what they want to do, they’ll be choosing on the the basis of what they think they can afford to pay a debt on.”
The budget also signals major changes to welfare payments. Jobseekers aged under 30 will have to be unemployed for six months until they are eligible for Youth Allowance, while the age of eligibility for New Start will be raised from the age of 22 to 25.
The HECS-HELP benefit, which “provided uni students with incentive to see out their degrees and seek employment in their particular field”, will also be scrapped from next year.
Projected Fed Govt spending on hospitals and schools will be scaled back by $80 billion over 10 years #budget
Dr Vaz says these are perhaps the most important elements of the budget.
“The biggest story in my view is lost opportunity, and the imbalance in terms of who’s lifting the weight,” he said. “I think it’s targeted at people who are receiving benefits, students being amongst them and young people on unemployment allowances. My concern is the under 30s and the under 25s will be hit particularly hard. Although they’re talking about ‘earn or learn’, which are nice buzzwords, where do they get the jobs from?
“The lost opportunity is that people who can least afford to lose their disposable income have the pressure put on them.”
Jesse Graham, a politics and journalism student, says these changes to welfare payments will impact already financially-strapped students.
“I’ve had friends receiving Newstart in recent years while studying, and if the changes forecast in the budget were in place at the time, they simply wouldn’t have been able to afford to keep studying,” he said. “It’s going to put pressure on those already struggling.”
The National Union of Students have called a ‘National Day of Action’ on 21 May in response to the budget announcement.
Rea says she has already requested that those who attend the rally not be punished by their educators.
“Uni students should all get out on the street on the 21st. We’ll certainly be encouraging any of our members to get out there too,” she said. “I think what students and staff will have to do is focus some of our approaches and criticisms straight at the universities. What the government has done is put the onus on the universities, they’ll have a big part in implementing this and it’ll be interesting how much they’re prepared to just go along with what the government says.
“Education is not a product in the way you purchase a car or a television. It’s something that people put their heart and soul into and then come out with a qualification that allows them to have many choices in their life.”