The community corps and student debt, #2

I expanded on my arguments against reducing HECS-HELP debt in exchange for community service for the Higher Education Supplement on Wednesday, but I am yet to convince everyone I have spoken to about the idea.

My main objection is to the link between community service and student debt, since I disputed the synergies between the two. If taxapayers are going to support community service, they should try to recruit the best candidates for the available work, whether or not they have student debt.

Against this view, I was pointed to Andrew Leigh’s comments in his AFR column:

Each year, approximately 75,000 young Americans participate in AmeriCorps, and many continue to work with the community after their service year ends. Implemented here, a similar program might have practical benefits for underprivileged communities. But its ‘eye-opening’ benefits could be greater still – giving affluent suburban youth a chance to spend a year facing disadvantage in all its complexity.

‘Affluent suburban youth’ are the largest client group of Australia’s universities. Perhaps it would be useful for them to see how the other half – or more accurately the 10% at the other end of the socioeconomic spectrum of their own 10% – live. But as Paul Miller’s research confirmed, students from more affluent backgrounds are less likely than people from poorer backgrounds to defer their student charges and so have a student debt to be reduced. Those who do accrue debt are unlikely to find it difficult to pay it back, so cuts to HECS-HELP will have weak incentive value.  There are also lots of well-off people who have never been to university or long-ago paid off any debts whose eyes might also be opened by contact with ‘disadvantage’.

The only real argument I can think of for paying for community service out of the HECS-HELP debt is that because the HELP debt has no real interest accruing, and some of it will be written off as debtors die, move overseas, or never earn more than thethreshold, its worth to taxyapers is less than its face value. So say we decide that we pay community corps workers $15 an hour, we could reduce the face value of a graduate’s HECS-HELP debt by that amount, which might be the equivalent of paying $10-$12 an hour in long-term cost to taxpayers.

Of course this depends on a range of assumptions about repayment patterns among community corps workers if they proceeded with alternative plans. And to the extent the community corps attracts people who are unlikely to repay anyway, it is not recruiting the future leaders whose experience with disadvantaged groups helps justify the scheme on Andrew L’s argument.

Overall, then, I remain unpersuaded that there are sufficiently strong synergies between community service and student debt to justify linking the two in a policy initiative.

7 thoughts on “The community corps and student debt, #2

  1. The idea is a total nonsense whichever way you look at it. The purpose of HECS is to raise funds for higher education. Is that too hard to understand? Sacrifice the return from the HECS debt, and how do you raise the extra? From the usual suspects, checkout girls and busdrivers, or do you just cut back on uni funds? So that is a bummer.

    What are graduates trained for? We hope remunerative and useful careers and professions. So you train an architect or an engineer or a doctor and then instead of having them pursue their career, they go and do low paid work as …what? Maybe they can go of and be cut price workers in their proper field, then what have they gained if they save the HECS by working for lower pay?

    Mad each way you look at it, but heck, it is the Comedy Festival we are talking about, sorry for taking it seriously:)

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  2. As for the idea of relatively affluent people working with the disadvantaged, for a long time I have been challenging the caring people on the left to get out and work with disadvantaged schools or communitities or people, to show that they really care about the people (and are not just addicted to political agitation) and also to find out what is really needed (which is almost certainly not more money thrown in the general direction)

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  3. I think you are missing a key factor. Volunteer community service could mean a reduction in present government expenditure in community care worth far more than the HECS reduction.

    For instance the Home and COmmunity Care Program currently funded by govt,, there is no shortage of demand, high waiting lists in the community. Lack of basic home care services service can prematurely lead eldery and diabled people into higher care and to longer in patient, for more expensive options presently being funded by the taxpayer. Why not have health graduates encouraged to use their skills in a voluntary capacity and reduce their debt in this way?

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  4. Sublime cowgirl – But this is not a volunteer scheme; it is a delayed payment scheme. Though in the post above I do note the possibility of gains from the effective net cost to taxpayers being less than direct payment, this does not get around the more basic objection that if you are going to employ people you should get the best workers for the money you have, rather than just people with student debt. And if it saves money in the long run to give the elderly community care, that will be true whether or not we put HECS debtors to work.

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  5. Cowgirl, I am just as much in favour of voluntary community service as anyone, but you are not addressing the basic reson for havaing HECS in the first place – to raise funds for education. How do you propose to make up the missing HECS funds if the scheme is implemented?

    Second, if it is cost effective to have more care of the kind that you recommend, why not just fund that straight up instead of stealing the money from education?

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  6. What about proposals by government to write down HECS/HELP debts not for volunteers, but those who take paid employment with government in areas where labour supply is low – eg teaching or nursing/medicine in remote areas? You don’t have to come from a wealthy backgroud to be clueless, or to rise to a position of power where that cluelessness is felt.

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  7. Andrew E – Similar issues arise in that effectively this is just a pay rise, and while more pay is probably needed to attract people to these areas why restrict the applicant pool to those with HELP debts?

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