The Guardian • Issue #2056


Student Debt, Class Warfare

  • The Guardian
  • Issue #2056

Student debt increases with inflation. Your wage doesn’t.

Students get a rough trot in the Australian media. They’re out of touch, “ivory tower,” not in “the real world.” They also don’t have much political leverage; students live all over the place, and when they vote, they usually vote Labor or Greens, not Liberal or National Party. In bourgeois politics, that means there’s no downside to conservative parties giving students a hard time, and there’s not much incentive for Labor to help them out.

Also students don’t agitate much. The last time the mining industry faced the prospect of paying more tax, it threatened to spend $100 million a day on anti-Labor advertising. The mining industry got what it wanted. Students get poorer, and get upset, but so far they don’t wield that kind of muscle.

Student debt is a relatively recent innovation in Australia, introduced by the Hawke ALP government in 1989. Starting off as a fee of $1800 per year, the debt grew like there was no tomorrow as successive governments worked out that there was no down side to increasing the amount paid, and lowering the threshold for repayments. At first, it looked like a win all round: governments saved on the cost of educating Australians, universities were funded without whoever was in power complaining about the cost, and students had an education on the never-never, to be paid off only when their income was high enough for them to pay it back through the tax system. Ruling class politicians tried to exploit divisions between working class and middle-upper class Australians. Why should people who work on building sites subsidise the education of dentists and corporate lawyers, they asked a population who are never ever asked if they mind subsidising private schools they can’t afford to set foot in.

A good answer to that question is this: because the people who work on building sites need TAFE courses which are also subject to HECS-HELP. Also, because their children, and brothers and sisters need tertiary education. A lot of people who aren’t planning on going to TAFE or university have children and grandchildren who are. We could also ask if you want your surgeon to be the best one in the class, or just the one who could afford to study medicine. We are rapidly approaching the point where your future surgeon, dentist, or lawyer is going to be “the one who could afford the course,” not the one who’s really good at it.

HECS-HELP is indexed to inflation. As everyone knows, inflation is back in a big way. Last year it grew by 3.9 per cent.  This year the indexation rate is 7.1 per cent.

A rationale for charging HECS in the first place was the argument that tertiary graduates tend to have higher incomes than the rest of us. That being the case, repayments should only kick in when graduates start earning those high incomes, right?

Wrong! You start paying up when your income hits $48,361. Try working full-time at anything and not making that.

Some argue – and a lot of people accept, that the country has to charge students to study because there are so many tertiary students. It’s true that there are a lot more post-secondary students now than there were when HECS was introduced, but it’s absolutely not true that Australia has no choice here. Total student debt was around $69 billion dollars in 2020-21. As this paper has pointed out many times, the Stage 3 tax cuts will cost the budget a quarter of a trillion dollars, in cuts that will go mostly to high income earners. Anyone who tells you we can’t afford to make TAFEs and universities free is wrong. The system that is putting the boot into Australia’s young people is a choice, not a “have to.” Let’s change that choice.

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