The intuition that rising university tuition fees are a problem is a powerful one, but in need of persuasive theories and evidence to support it. As research cast more doubt on the idea that HECS negatively affected decisions to attend university, the argument switched to its effects after graduation.
The first serious attempt to do so was a paper in 2002 by a University of Tasmania academic, Natalie Jackson, suggesting that HECS might reduce fertility, as couples, and particularly women, postponed having children to pay off their HECS debt first. Though Jackson herself was cautious, given the data limitations, the idea was enthusiastically taken up by proponents of lower HECS, as I noted in my 2003 paper (pdf) criticising the idea. Subsequent analysis using HILDA data, published recently in the Journal of Population Research, showed that my argument was correct.
Another version of the argument is that, because of HECS, graduates will struggle to buy a home. Kevin Rudd has made this argument, effectively suggesting (as I pointed out at the time) that graduates be given a second first home buyers grant not available to the poor plebs who have to work to pay for their homes, rather than getting a wealth transfer from the Commonwealth.
A third version of the argument, which has come up this weekend in The Age and from commenter Matt, is that HECS debts will distort career choices away from public service type jobs towards employment that will generate the cash flow required to repay loans.
As The Age put it:
Continue reading “What effects would rising uni fees have on the labour market?”