The last week in Australia has been in uproar over the Liberal parties budget. The libs promised heavy cuts to public spending and they sure delivered on this. In my opinion its necessary to cut down on spending, the deficit has been rising in leaps and bounds over the last few governments. Although the previous Labour government brought us some great new things such as the NBN, the deficit has been let go as Australia began spending far more than its making through tax and other sources.
Australia does not have as much debt as the Liberal party would have us believe. Comparatively our debt to Gross Domestic Product (GDP) is quite reasonable compared to countries such as the US, Uk or Japan, (click here to see it for your self).Still its a good idea for us tor rein in the spending and get the budget back under control, if we continue with such a large deficit its only a matter of time before we a loaded with an unreasonable amount of National Debt resulting in some of the pain and cut backs experienced in other nations, far worse than the ones the Coalition government is proposing. So, a little bit of pain today will save us from a lot more in the future.
Still the question remains whether the cutbacks to education are justified? The solution seems to be that cutbacks in education means piling on more debt for students and letting institutions charge whatever they want. I think this is possibly not the correct solution, loading up young people with more debt at higher rates will keep them under the debt burden till well in their late twenties, hampering their ability to take out one of those 30 year mortgages on their own property. Fair enough some of the debt should be covered by students studying the degrees, however we don’t wont to go down the path which the USA has followed of loading up young people with the full responsibility of their tertiary fees and living costs, at some point it becomes unsustainable in fact in the USA many student loans are being forgiven for this reason. We already have a shortage of Nurses and Teachers in Australia, adding more debt burden to them for the right of pursuing this career just adds to the problem.
Here is my summary of the 2014-2015 proposed changes to the budget.
Interest on Tuition Fee Debts
Presently Interest rates on Higher Education Loans in Australia are capped to the rate of inflation, so 2-3%, its proposed under the budget that these rates would be changed to reflect the rate that the government is paying to finance these Loans. So instead of being charged 2-3% one HECS-HELP loans, we will be charged a maximum of 6%, which will be added to the outstanding balance at the end of every year. I have mixed opinions about this, while I tend to think its fair enough that charging cost price for education loans still sounds like a good deal, I also think its going to make it a lot harder for younger
Repayment Threshold for Higher Education Loan Program Debts
After graduation University the threshold income you can earn before having to pay back your debt will decrease too $50,638, this was planned to be $53,343 in this period. So, expect to pay back more of your debt’s sooner. The budget also states that “there will be a new repayment rate of 2 per cent of repayment income will be applied to debtors with incomes above the new minimum threshold”, presently the lowest rate for repayment is 4%, was unable to clarify how this 2% repayment rate will work.
Hecs-Help Loans for Diploma’s, Advance Diplomas and Associate Degrees
As part of the “Earn of Learn” policy, over 80,000 more students will be eligible for Commonwealth Supported places. This means Students studying Diplomas, Advanced Diplomas and Associate degrees may be eligible to receive Government support in the form of Hecs-Help tuition loans and Centrelink welfare benefits such as Youth Allowance and Austudy.
Uncapped Course Fees
Tuition fees will be uncapped allowing Universities and providers to charge what they want. Although it was claimed in the budget that the fees of some institions will be cheaper, its more than likely that most of the good universities will become more expensive. Just how expensive, we dont know.