Rise in student loans will surpass a decade of hikes as cost of living soars
“Some people say a student loan is the best debt you can get, but it’s also one of the hardest to pay off because it quietly eats away at your paycheck every fortnight.
“With wages stagnating and CPI indexing rising, how am I supposed to pay it back in full?”
Data released on Wednesday showed wages rose just 0.7% in the three months to the end of March and 2.4% for the year, well below annual inflation of 5, 1%.
In WA, wages rose only 2.2% for the year and 0.5% for the quarter.
Meanwhile, university fees in Australia have skyrocketed over the past 30 years and are now at an all-time high.
Significant changes to university funding in 2020 have seen the government increase student contribution amounts for degrees such as law and communications, and cut them for others such as nursing, in a bid to attract students in fields where more graduates were needed.
An undergraduate bachelor’s degree can cost between $20,000 and $45,000, with the cost of some courses such as veterinary science and medicine being much higher.
Data from the Australian Tax Office shows the time it takes to pay off student debt has increased, reaching an average of 9.4 years in 2020-21, more than a year longer than a decade ago, when the average HELP balance was $15,191.
If the Greens hold the balance of power in the Senate, one of their main measures will be to erase student debt and abolish university fees.
WA Greens Senator Dorinda Cox said 2.9 million people owed an average of $23,685 in student debt in 2020-21.
“Many current MPs, including the prime minister, went to university when it was free,” she said.
“With the cost of living and housing prices soaring, abolishing student debt is a cheaper and fairer way to combat cost of living pressures.”
Cox said erasing all student debt would cost $33 billion over forward estimates and $60.7 billion over the decade, about a third of the $184 billion cost of tax cuts from step 3.
“Analysis prepared by the Parliamentary Budget Office reveals that in 2024-25 the benefits of the government’s proposed tax cuts will flow overwhelmingly to high earners and men, while the benefits of the Greens’ plan to erasing student debt will go to low and middle income people and women,” she said.
Property Investment Professionals of Australia chair Nicola McDougall said women were disproportionately affected by rising student debt.
“A way to facilitate [HELP] The burden on women would be to apply an inflation freeze during any period of maternity leave or when they are not in the labor market so that their university debts do not skyrocket,” she said. declared.
“That way, when they go back to work, they are not faced with a debt that has ballooned dramatically, just because they took time off to care for their children.”
McDougall said the mandatory repayment of college debt was one of the reasons women decided to leave the workforce to care for children.
“Essentially, with child care costs and tax considerations, if they continued to work part-time, they could end up with no take-home pay, so it made little sense financially at the time,” she said.
Independent economist Saul Eslake said enforcing a freeze while women were on maternity leave was a smart move, but questioned the effectiveness of writing off all student loans.
“Erasing student debt would help women who generally earn less than men and are more likely to spend time out of the workforce to care for children or elderly parents,” he said.
“It would help low-income former students – but it would also help students who earned high salaries shortly after graduation, such as lawyers and investment bankers, and I would wonder why they should be helped. in this way.
“A better policy would be to erase or reduce student debt for former students whose income is below a certain threshold, with a phase-out for those whose income exceeds that threshold.”
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