Buried in the Mid-Year Economic and Fiscal Outlook was a change to the FEE-HELP loan system. From July 2010, the ‘administration charge’ (more accurately, debt surcharge) for fee-paying undergraduate students will increase from 20% to 25%. So for example a student borrowing to finance a $10,000 fee would incur a debt of $12,500 rather $12,000.
While I don’t object to the HELP scheme being put on a sounder financial basis – lending money at zero real interest is an expensive business – targeting just this group is highly anomalous.
Since full-fee undergraduate places are being phased out of public universities, this change hits students at TAFEs and private providers. The TAFEs and private ‘feeder colleges’, institutions offering diploma programmes that articulate into bachelor courses, are exactly the kinds of higher education providers a government wanting to improve access to higher education should be encouraging. They give second chances to people who didn’t get the Year 12 scores they needed, or mature age students returning to study after a long absence.
On this year’s estimated FEE-HELP lending to students at TAFEs and feeder colleges, this change will cost them about $1.5 million a year.
Meanwhile students doing postgraduate courses – mostly people who will already have enjoyed significant public subsidy as undergraduates – continue to pay no FEE-HELP debt surcharge at all, and so enjoy significant real interest subsidy.
And the federal government is abolishing the 20% surcharge on money borrowed under the OS-HELP scheme, to finance study overseas.
The government’s policy seems to be to penalise students trying to get a second chance, while giving interest subsidies to middle-class kids enjoying a semester at an overseas university.
The different policies for international travel and postgraduates compared to undergraduates look like warped priorities for any government, but particularly warped for one claiming to be on the egalitarian end of the political spectrum.
My solution is to abolish all the different HELP schemes (HECS-HELP, FEE-HELP, VET-HELP, OS-HELP and if the government has its way SA-HELP) and have one HELP scheme with common conditions for all students.