Universities in united stand over student debts

The federal government faces blanket opposition from university vice-chancellors to its plan to increase the interest rate on all student debts and slash university funding, a survey shows.

The Fairfax Media poll of the nation's 39 vice-chancellors - who are divided on the question of fee deregulation - found a unified stance against applying an interest rate of up to 6 per cent to student debts and cutting the Commonwealth contribution to the cost of a degree by 20 per cent.

These measures have sparked criticism from university leaders who would otherwise have rallied behind the government's plan to deregulate university fees. Peak body Universities Australia is calling on the government to rethink both policies. Giving ground on these measures could help the government win broader support for its reform package, which faces a hostile Senate.

The sector is ramping up its lobbying efforts as two government-appointed working groups prepare to report next month with recommendations on the details of the reform package.

University of Technology Sydney vice-chancellor Ross Milbourne said: "I don't think any vice-chancellor in the country supports the move to increase the interest rate on HELP debt.''

Deakin University vice-chancellor Jane den Hollander said it was ''punitive and unfair'' to link the interest on student debts to the 10-year treasury bond rate rather than inflation.

''Compound interest will have many unintended consequences: the poor will acquire more debt, while others will be indifferent to course fees as they simply defer payment, never work or leave Australia,'' she said.

UNSW acting vice-chancellor Iain Martin said fee deregulation was needed to avoid an inevitable decline in the quality of Australian universities. But he added: ''We are surprised and concerned at the extent of the reduction in the government contribution to the cost of a degree, and the significant burden that will place on students.''

Professor Martin said student debts should remain pegged only to inflation, with no additional interest imposed.

University of Canberra vice-chancellor Stephen Parker, an opponent of fee deregulation, said the proposed changes were ''unfair, unethical, reckless [and] poor economic policy".

Victoria University vice-chancellor Peter Dawkins offered a set of ideas to improve the government's package including: indexing debts to inflation until students graduate; putting a cap on the size of student debt; and offering greater government subsidies to low-income students.

Flinders University vice-chancellor Michael Barber opposed the interest rate changes, saying: ''I believe students will end up with debt levels that are as high as America, and we don't want to see that here.''

Fairfax Media gauged the views of 28 universities through answers to a questionnaire and statements on the public record.

Education Minister Christopher Pyne said it was fair for graduates to repay their debts at the same rate it costs taxpayers to borrow the money, given most Australians do not attend university.

In a speech in Brisbane on Wednesday, Group of Eight universities executive director Michael Gallagher said the government's higher education reforms are ''not quite as radical as the demonisers of competitive markets in education allege''.

''My guess is that the detractors of micro-economic reform in Australia’s higher education industry will find themselves on the wrong side of history,'' he said.

''[The reforms] are logical, coherant, sustainable, equitable and inevitable.''

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The story Universities in united stand over student debts first appeared on The Sydney Morning Herald.

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