Has anyone really accrued a HELP debt of $384,957?

The Herald-Sun this morning reports on the country’s biggest HELP debts, with the highest coming in at $384,957 according to the ATO.

I did some background for this story (though unfortunately for my media mentions, in the story I am only one of the anonymous ‘education experts’ recommending caps on HELP debts), including some modelling of how much somebody could end up owing.

In my maximum debt scenario, my hypothetical student has been enrolled continuously since HECS started in 1989. Until 2002, he/she takes the most expensive HECS course on offer. When the PELS scheme for full-fee postgraduate students starts in 2002, he/she takes the most expensive MBA course for $48,000 a year for two years (though in reality you need business experience to get into these courses). They then find another postgraduate course to do for another couple of years over 2004 and 2005, at $30,000 a year. Now they are covered by the capped FEE-HELP loan scheme, and to max that out I enrol them in a full-fee medicine course for $25,000 a year for four years. In 2010 I switch them to a Commonwealth-supported place to continue the medical course, with a HECS-HELP loan of just under $9,000.

The total debt for all this, including the effects of indexation, is $371,787.

Perhaps I have missed the most expensive permutation of courses. But the more obvious problem with my model is that it assumes my hypothetical student would be accepted into all these courses.

Of the two main explanations for the $384,957 figure, (1) that a student has managed to find a way to maximise their HELP debt, or (2) that in the (I would estimate) 1.5 million current HELP debtors someone has had a slip on the keyboard and added an extra digit to someone’s debt, I think (2) is the more likely.

12 thoughts on “Has anyone really accrued a HELP debt of $384,957?

  1. Another way to rack up big HECS debt, though not as big as in the story, is for people who move overseas as soon as they finish uni. Because they are o/s, they don’t have to pay back the debt, but it accrues interest. A decade and a half of compounding and you’re talking serious money.

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  2. You’d need to fail everything 10 times to get the debt up to those levels. Presumably those students will have dropped out or been booted out well before then.

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  3. Whether you are repeating or doing different courses makes no difference to my calculations (same price either way) unless we can squeeze in a few summer catch-up courses. But if someone has a history of failing it makes it all the more unlikely that they would continuously be accepted into new courses.

    S of R – At least when they are overseas they are not accruing any new tuition debt!

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  4. I knew this bloke that used to enroll themselves into 8 courses (units) a semester. The theory was, they would fail half of them, and get thru like a normal student.
    He said he could get away with it, cause Uni admin was so weak. e.g. one department wouldnt talk to another, make written things up, whatever it took.
    With declining standards, lax admin, multiple choice exams, I reckon he was a bona fide!
    Anyway, I reckon the system is weak and can be rorted pretty easy. e.g. you not working, you having kids, you leave country, don’t report taxable income, you die, then you don’t pay back the debt. It’s just too easy.

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  5. It reminds me a bit of the game show “the price is right” where you need to drop out one of the digits to try and work out what the ACTUAL price should be.

    I’m assuming that the first “3” was typed accidentally by someone with too fat fingers while they were going for the $ sign.

    $84k is a decent debt, but one that might be achievable by someone in reality.

    Are there any full-fee places that cost more than $25k/ year?

    Actually I found one that might help get close to capping out at $385k- Bond University is $281,918 for a medicine degree.

    Was Bond ever eligible for FEE-HELP?

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  6. It’s possible that they’ve included the Austudy Supplement Loan component. That is associated with HECS debts and can really add up fast. I know that my total debt (HECS and Austudy Supplement Loan) is over $80,000, and I did a total of seven years at university.

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  7. Shem – Bond students do get FEE-HELP – it has led to a massive increase in domestic enrolments – but the most they can borrow is a bit over $100,000. They have to find other sources for the rest.
    TJW – That’s a possibility, but I am still going for the error explanation overall.

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  8. A little bit OT, but if someone dies with a HECS debt, is the debt forgiven or is the dead person’s estate on the hook for it, like other debt?

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  9. Andrew – Isn’t there also a rule about the maximum full time equivalent study (I think it’s seven years)? If there is, doesn’t that make it more likely that the large debt it a mistake?

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  10. David – There is, but it only started in 2005, so it is not yet likely to be having any effect. Someone who had been studying since 1989 would have started with a zero balance in 2005. The government plans to abolish the time cap from next year, a move they should not make without first capping the dollar amount of HELP debt students can have.

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