PM defends daughter’s scholarshipAbbott says cannot guarantee university fees won’t doubleChristopher Pyne smuggled past students at Sydney Uni
Parents should start putting money aside to fund universities degrees if they want to spare their children crippling debt burdens, academics warn.
“I would start saving now,” says Monash University’s associate dean of education Lucas Walsh.
Professor Walsh expects the federal government’s proposed changes to higher education could result in substantially larger university debts in some areas for students.
University graduates will most likely be subject to higher rates of interest on their loans under the reforms.
Interest rates will be pegged to the government bond rate instead of inflation with a cap of 6 per cent, up from 2.9 per cent currently.
And Professor Walsh says these larger debts could mean graduates delay major life choices, including starting a family or buying a home.
In the changes outlined in the recent federal budget, fees will be deregulated, allowing universities to charge as much as they want for courses.
But Education Minister Christopher Pyne said university students are misguided about the federal government’s education reforms
”University students will not be paying double the fees they are paying now,” he told Fairfax Radio Network on Friday morning.
”They are very misguided and spreading a great deal of misinformation.”
Although students will not have to pay back their loans until their pay reaches a threshold, Professor Walsh says their debts will be accumulating interest while graduates struggle to find jobs.
He says the workforce is becoming more “fluid” with stable, long-term jobs increasingly difficult to find.
“As a consequence I think it could affect the paying power of these students to repay their loans.”
Grattan Institute higher education program director Andrew Norton says course fees will rise on average but prices at private universities will almost certainly decrease.
He says the international student fee market in 2013 offers a rough guide to what domestic students can expect to pay for courses at the higher end.
His analysis of estimated maximum fee rises shows that student contributions to a law degree could go up 129 per cent to $22,415 a year.
An arts degree could rise by 159 per cent to $15,223 annually for domestic students.
However, he stresses there will be cheaper options available.
But students should make their own decisions about university education, he says.
“I’m still inclined to think these students are adults. They should be making adult choices about how much they spend and not expect their parents to pay for it,” he says.
And students should think carefully about the benefits of expensive courses particularly if there are cheaper alternatives for similar qualifications. “If you don’t get much, don’t pay it.”
But Smith Family general manager Anton Leschen says it is fanciful to think many parents have money to spare for their children’s future education.
“They’re focusing on transport costs, rising living costs. They didn’t have enough money to put aside previously,” he said.
Melbourne University higher education lecturer Emmaline Bexley says some parents may need to choose between independent schooling or setting aside money for tertiary education.
Dr Bexley points to US research that shows people with student loans are retreating from the housing market.
Last week Bloomberg reported that young people who weren’t saddled with college debts had taken out more mortgages than “student-loan borrowers”.
Bloomberg said the decline in “home-purchase ability” for people with student loans was an example of how education debt was dragging on the US economy.
Here the federal government wants to introduce measures to increase scholarships for disadvantaged students. But some university leaders have cited fears that children from middle-class families – who are unlikely to be eligible for hardship scholarships – could be priced out of university education.
But Mr Pyne said the students were wrong thinking the reforms would make universities accessible only to the rich.
”Not when you can borrow every single dollar up front from the Australian taxpayer and not pay it back until you’re earning over $50,000 a year and at the lowest interest rate that you’ll ever get for a loan in your entire life time,’’ he said.
Mr Pyne said middle-class families would not be priced out of tertiary education because of higher fees and higher rates of interest.
”That is just wild speculation. In my reforms to higher education we are massively expanding the number of providers who can access the Commonwealth government subsidies for students, that means there will be an adrenalin shock into the market. And if universities charge exorbitant fees, they won’t get any students,” he said.
He also said the Commonwealth scholarships program wais being expanded and there would be more opportunities for first-generation university goers.
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