Student Financial Contributions, Financing and Operations
Caroline PerkinsAustralia
Outline
• Higher Education Loan Programme (HELP)– Background– Recent changes– Student borrowing and debt repayment
• Student assistance and participation from low socio-economic groups
Higher Education Loan Programme - HELP
• Introduced in 1989 as the ‘Higher Education Contribution Scheme’ (HECS) mainly for undergraduate study
• 1997 – Differential HECS• Revamped from 2005 as the Higher
Education Loans Scheme (HELP)
HELP - KEY FEATURES
• Assistance for tuition costs– Separate system for assistance with living costs
• Non means-tested entitlement• Interest-free loans and discounts for up-front
payment• Income-contingent repayment with indexation
of loan balance and bonuses for faster repayment
HELP LOAN TYPES
• HECS-HELP - for Government subsidised university places (mostly undergraduate)– Loans and/or 20% discount for up-front
payment of ‘student contributions’ (including part payments)
– 75% of eligible students take out a loan– Student Learning Entitlement limit (generally 7
years equivalent full-time study).
Resourcing amounts per equivalent full time student load (2008
estimates), prior to 2007-08 Budget
Discipline
Commonwealth contribution
(including 7.5% conditional increase)
Maximum student
contribution
Total maximum funding
Law $1,674 $8,498 $10,172Accounting, administration, economics, commerce $2,757 $7,259 $10,016Humanities $4,647 $5,096 $9,743Mathematics, statistics $5,488 $7,259 $12,747Behavioural science, social studies (incl clinical psychology) $7,377 $5,096 $12,473Computing, built environment, health (incl allied health) $8,217 $7,259 $15,476Foreign languages, visual and performing arts $10,106 $5,096 $15,202Engineering, science, surveying $13,679 $7,259 $20,938Dentistry, medicine, veterinary science $17,146 $8,498 $25,644Agriculture $18,227 $7,259 $25,486Education $8,108 $4,077 $12,185Nursing $11,171 $4,077 $15,248
New Cluster Funding Arrangements Announced in 2007-08 Budget
• Decrease in funding clusters from 12 to 7• Increased Commonwealth funding for:
– Mathematics and Statistics ($2,729; 49.7%)– Behavioural Science and Social Studies
($840;11.4%);– Education ($109; 1.3%);– Allied health ($1,889; 23%);– Clinical Psychology ($2,729; 37%);– Nursing ($109; 1%);– Engineering, Science and Surveying ($684; 5%);– Medicine, dentistry and veterinary science ($1,081;
6.3%).
New Cluster Funding Arrangements Announced in 2007-08 Budget
• Funding for accounting, administration, economics and commerce aligned with the Commonwealth contribution for law ($1674 in 2008, down $1083 from $2757).
• Accounting, administration, economics and commerce will move into the same HECS-HELP band as law (maximum $8498 for 2008, a rise of $1239 from $7259).
New Resourcing Amounts (2008 estimates) (per equivalent full time
student load)
Discipline
Commonwealth contribution
(including 7.5% conditional increase)
Maximum student
contribution
Total maximum funding
Law $1,674 $8,498 $10,172 Accounting, administration, economics, commerce $1,674 $8,498 $10,172 Humanities $4,647 $5,096 $9,743 Mathematics, statistics $8,217 $7,259 $15,476 Behavioural science and social studies (excl clinical psychology) $8,217 $5,096 $13,313 Education* $8,217 $4,077 $12,294 Computing, built environment, other health $8,217 $7,259 $15,476 Clinical psychology $10,106 $5,096 $15,202 Allied health $10,106 $7,259 $17,365 Foreign languages, visual and performing arts $10,106 $5,096 $15,202 Nursing $11,280 $4,077 $15,357 Engineering, science, surveying $14,363 $7,259 $21,622 Dentistry, medicine, veterinary science $18,227 $8,498 $26,725 Agriculture $18,227 $7,259 $25,486
Private rates of return and gain in lifetime earnings for 4 disciplines
Borland, J: New Estimates of the Private Rate of Return to university education in Australia, Melbourne Institute Working Paper No14.02, July 2002.
Field of study Average private
rate of return (% ) Net lifetime gain (with
a 4% annual rate of discount) ($)
Business and administration 18.0 231,014 Society and culture 11.0 83,774 Science 11.0 132,801 Engineering 19.5 310,257 All fields 14.5 145,638
HELP LOAN TYPES
• FEE-HELP – for domestic fee-paying students (mostly non-research postgraduate at public universities and undergraduate/postgraduate at private higher education providers)– $A80,000 (≈$US62,800) lifetime limit generally and
$A100,000 (≈$US78,500) for dentistry, medicine or veterinary science degrees
– 20% loan fee for undergraduate courses
HELP - KEY FACTS
• Loans in 2005-06– $A2.1 billion (≈$US1.6 billion)
• Persons with a HELP debt– 1.2 million
• Total debt outstanding– $A12.4 billion (≈$US9.7 billion)
• Average debt– $A10,400 (≈$US8,200)
• Average repayment time– 7.4 years (for fully repaid debts)
• Debt not expected to be repayable– 18% of total outstanding debt, $2.4 billion (12.4% of debt on
completion)
Accumulated HELP debts and doubtful debt 1989-90 to 2005-06
Year
Voluntary repayments by students
($m)
Repayments through tax system ($m)
Outstanding HELP debt
as at 30 June ($m)
Accumulated debt expected
not to be repaid (doubtful debt)
($m)
% of total
HELP debt
1988–1989 1 9 216 N/A N/A
1989–1990 2 28 673 N/A N/A
1990–1991 6 49 1,190 N/A N/A
1991–1992 12 57 1,749 N/A N/A
1992–1993 11 72 2,321 386 16.6%
1993–1994 19 133 2,932 438 14.9%
1994–1995 16 169 3,354 541 16.1%
1995–1996 32 218 3,958 687 17.4%
1996–1997 58 262 4,504 607 13.5%
1997–1998 67 472 4,922 700 14.2%
1998–1999 72 497 5,526 953 17.2%
1999–2000 80 532 6,229 1,124 18.0%
2000–2001 97 586 7,162 1,397 19.5%
2001–2002 134 612 8,104 1,723 21.3%
2002–2003 137 638 9,164 2,018 22.2%
2003–2004 156 701 10,185 2,055 20.2%
2004–2005 193 666 11,371 2,166 19.0%
2005–2006* 137 671 12,925 2,501 19.4%
Repayments of HECS debts
0100200300400500600700800900
1000
1988
-198
9
1989
-199
0
1990
-199
1
1991
-199
2
1992
-199
3
1993
-199
4
1994
-199
5
1995
-199
6
1996
-199
7
1997
-199
8
1998
-199
9
1999
-200
0
2000
-200
1
2001
-200
2
2002
-200
3
2003
-200
4
2004
-200
5
2005
-200
6
$ m
illio
n
Voluntary repayments Compulsory repayments Total repayments
Accumulated HECS debts
0
2000
4000
6000
8000
10000
12000
14000
1988
-198
9
1989
-199
0
1990
-199
1
1991
-199
2
1992
-199
3
1993
-199
4
1994
-199
5
1995
-199
6
1996
-199
7
1997
-199
8
1998
-199
9
1999
-200
0
2000
-200
1
2001
-200
2
2002
-200
3
2003
-200
4
2004
-200
5
2005
-200
6
$ m
illio
n
Outstanding HELP debt Doubtful debt
• Repayments are through the Taxation System– Integration with tax payment system– Integrated with tax compliance system
• Students provide Tax File Number (unique lifetime identifier) at time of application
• Loan data are transferred electronically to taxation office
• Compulsory repayments are added to income tax assessment
Taxation System
• Payments are deducted from salary• Voluntary repayments to taxation office• Loan default is not possible unless a
person is a tax avoider• All of the tax compliance processes
apply• Criminal penalties for tax evasion apply
Taxation System
Merit-based Student Aid
• HELP (Tuition assistance) • Scholarships• Income Support
Scholarships
• University Scholarships – may be targeted to students with very high university entrance scores; or to students from low socio-economic backgrounds.
• Commonwealth Scholarships (about 2.5% of full time undergraduates)
– Programme provides support to assist with costs associated with higher education
– Targets students from low socio-economic backgrounds– Open to undergraduate students doing any course (postgraduate
only for nursing and teaching)– Exempt from income assessment for social security purposes
Commonwealth Scholarships
• Commonwealth Education Costs Scholarship - $2,120 a year (2007 prices) for up to 4 years
• Commonwealth Accommodation Scholarship - $4,240 a year (2007 prices) for up to 4 years
• Both available for undergraduate courses, two-year associate degrees, and one-year enabling courses for Indigenous students
• $4,000 one-off scholarship for Indigenous students moving to access university
Income Support
• Youth Allowance, Abstudy and Austudy means and assets tested for people who are studying and can’t support themselves or can’t be supported by their parents (for students under 25).
HELP – Tuition assistance
• Increased participation following the introduction of HECS in 1989.
• Benefited low socio-economic status (SES) students as well, but these students have not increased their share of domestic students.
• Low SES have remained between 14.5 and 15 percent of the total number of domestic students, between 2001 and 2005.
• Low SES tend to fall behind at school.
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