The backdoor student loans scheme

June 3, 1992
Issue 

By Angela Walker

The Chapman review of Austudy, released on May 15, presents the federal government with a range of options to reform student financial assistance. Unfortunately, most of the options and the bulk of the report are concerned more with the government's desire to save money than with the needs of students.

Dr Bruce Chapman is already familiar to many students as the designer of the Higher Education Contribution Scheme. HECS was a "soft option" move towards user-pays higher education, and in his new report Dr Chapman has done it again, constructing a scheme designed to fragment and minimise student protest but to maximise savings for the government.

The proposal is for "optional" loans: students would be able to trade in all or part of their Austudy grant for a loan equal to twice the value of the original grant. Since Austudy leaves students well below the poverty line, many students will be pressured to "choose" a loan to avoid the student poverty trap. And if enough don't make this "free choice", Austudy can always be further reduced.

In March, a proposal was floated for the total replacement of Austudy by loans. This was rejected by the federal minister for higher education, Peter Baldwin. Having "defended" students from that dragon, will he now ask students to be "reasonable" and not object to "voluntary" loans?

Other cost cutting measures presented as options in the report include the abolition of Austudy for secondary students and the scrapping of payments of less than $20 per week (worth from $250 to $1040 per year, plus free travel for away-from-home students). The report contends that these benefits have negligible influence on the educational participation of students.

The report also contends, without proof, that "students who are usually poor usually become graduates who are not poor". This argument totally ignores the fact that students disadvantaged by sex, race, ethnicity or socioeconomic background are also disadvantaged within the labour market when they graduate.

Students who emerge from higher education with substantial debts and poor career opportunities may "choose" to join, for example, the armed forced or a specific employer in exchange for the payment of their study debt. As Chapman explains, "A further policy point, worth exploring more, is that the Government could use income-contingent loans to influence labour market outcomes. For example, the debt could be forgiven in the event that a former student undertook teaching for several years in a locationally undesirable area."

The government already has the power to restrict graduates with substantial HECS debts from leaving Australia.

Some of the options suggested by the Chapman report may be adopted in the August federal budget. An increase in the HECS charge above indexation may also be something that the government believes it can get away with. It is crucial that academic unions, members of the community and students come together to challenge these attacks.

You need Green Left, and we need you!

Green Left is funded by contributions from readers and supporters. Help us reach our funding target.

Make a One-off Donation or choose from one of our Monthly Donation options.

Become a supporter to get the digital edition for $5 per month or the print edition for $10 per month. One-time payment options are available.

You can also call 1800 634 206 to make a donation or to become a supporter. Thank you.