HECS architect criticises scheme for upfront fees

By Kay Barney

The architect of HECS, Professor Bruce Chapman, has co-authored a paper which is highly critical of the Federal Government's decision to allow universities to charge up-front fees, both on economic and social grounds.

Authors Bruce Chapman and Tony Salvage of the ANU's Centre for Economic Policy Research, say that allowing up-front fees without a loans scheme to help financially disadvantaged students, moves the student composition in higher education away from those with the capacity to learn, and instead towards those with the ability to pay.

They released their paper last week on "The Consequences of Recent Changes in Financing for Australian Higher Education".

The study points out the 1996­97 Federal Budget does not guarantee publicly funded places will meet the demand, suggesting that over time, tertiary institutions will increasingly have higher proportions of up-front fee paying students.

"The consequences are that academic talent is wasted and there is a further entrenchment of the nexus between students' socio-economic background and their likely lifetime professional success," the study concludes.

Loans for education are not readily available because banks receive no saleable collateral if there is default on an education loan.

"Because slavery is against the law, banks are unable to possess and sell the human capital development being undertaken by the student taking out a loan for his or her education," it says.

The paper also looks at the financial implications of the 1996-97 FederalBudget changes to the HECS scheme for both current and past students with a HECS debt.

New students face increases of about 30 per cent in HECS repayments due to the 1996­97 Budget changes and are looking at paying it off over a longer period because the debt is bigger.

"But even those who have finished their degrees and thought they were safe from further HECS changes, are effectively repaying more," said Professor Chapman.

This means that, in financial terms, they pay more because they must now pay back their debt more quickly.