Key Points
- Americans earning less than US$125,000 are set to have US$10,000 debt wiped off what they owe.
- The average HECS-HELP debt is about $24,000.
Like many university students across Australia, Evie Thompson routinely receives her updated student debt notices in an email.
"I'll sit down with my roommate and it's kind of like a joke how unbelievably expensive random courses are, for no reason," the Melbourne arts student told SBS News.
"Once I see that, it's a bit depressing, but then I put my phone down so it doesn't stress me out."
Like her, Atticus Corr, a University of Melbourne student, believes the rising cost of living is hurting tertiary students - and the high cost of tuition fees are not helping.
In his early 20s, Mr Corr has a debt of about $20,000 for his studies for an arts degree and he is expected to graduate this year.
He’s one of almost three million people who has a HECS-HELP debt.
But two decisions on opposite sides of the world have again fuelled debate about whether free higher education is feasible in Australia.
In Australia, the Victorian government has announced that more than 10,000 budding nurses and midwives will have their university degrees paid off in full to boost staffing across Victoria's ailing health system.
The initiative will support all new domestic students enrolling in a professional-entry nursing and midwifery course in 2023 and 2024 with scholarships of up to $16,500 to cover course costs.
In America, US President Joe Biden has promised to wipe US$10,000 in student debt from those who earn less than US$125,000 a year.
Many Australian university students are keen to see something similar implemented for HECS-HELP debt.
Atticus Corr could have about $80,000 of student debt to pay once he completes a masters degree.
"While it would be great for the Australian government to do something similar in that they wiped bunch of debt from us, in my opinion, they should be trying to implement universal free education to begin with," she said.
"I have no idea how long it's going to take for me to actually start earning that amount of money (to pay back the loan," she said.
"But I still don't like the thought of having to pay it back at all considering most of the people who are in parliament who are hiking up the price of arts degrees are people who access free education anyway."
Experts say waiving student debt won't work
According to one of the architects of Australia's HECS-HELP system, a similar plan to the US to wipe a portion of student debt is not needed in Australia.
Economist and Australian National University Professor Bruce Chapman said the two loan systems were very different.
"In the US the student loans are such that they have to pay it back no matter what their circumstances are,” he said.
“If they're unemployed or just graduated, they're looking for a job or they have part-time work, they've got to pay back their loan no matter what and that means when labour markets are a bit chaotic as they have been with the pandemic, there are a lot of graduates who are unable to pay their debt.”
Professor Chapman said removing student debt in Australia could lead to higher taxes.
He said revenue from student loans equals about $4-5 billion a year and governments would not want to lose that.
“It would mean higher taxes or most likely a lack of full funding for the programs we currently have,” he said.
'Incredibly daunting'
Mr Corr said he was only really now starting to feel the reality of the debt he’d signed up to as a teenager.
“Beginning in the job market in that entry-level and having to pay off that amount it is incredibly daunting, especially with the cost of living crisis at the moment,” he said.
“When you're entering uni, you're 18, you're just excited to go to uni, you don't have that thought of how much you're going to owe eventually.
"Over the time you spend at uni you grow up and start to realise, 'Oh my God, I'm actually going to have to pay this off at some point'."
Mr Corr wants to be a teacher, so will also need to study a masters in education, which will add another $60,000 to his total debt.
'Free education is always beneficial'
University of Melbourne Students Union president Sophie Nguyen said the increasing cost of living, meant students were doing it tough.
"We recently opened up a food relief program in collaboration with the university and there are lines upon lines, hours of waiting just to get free food and like fresh produce," she said.
"That speaks volumes about the type of student poverty that exists on campus and across the country at different universities.
“Students are doing it tough and it's been a trend for a while and I don't think COVID has made that any better."
She welcomed the Victorian government's announcement of free nursing and midwifery courses,
"Free education is always beneficial for our society," she said.
"It's going to definitely drive up the demand in terms of students wanting to go into that field."
But she said a principal point to the idea of free education is whether jobs would be available for those who graduate.
University of Melbourne Students Union president Sophie Nguyen.
How Australia compares with the world on university fees
Analysis done by the Organisation for Economic Co-operation and Development shows the average yearly university fees are highest in the UK at around US$12,000 per year, followed by the US, Chile, Ireland, Japan and Canada.
Australia comes in next, with an average yearly cost of around US$5000.
On the other end of the scale, fees in France, Belgium and Germany averaged less than US$250 a year.
While Denmark, Finland, Norway, Sweden and Turkey all offer free education to residents.
How does student debt work in Australia?
HECS-HELP is a low interest loan from the federal government that is used for students to pay for their degrees.
Interest is fixed to inflation, and students start paying when they earn $48,000 a year.
Data from the Australian Taxation Office shows almost three million people have a HECS-HELP debt, totalling more than $68 billion.
In 2021, the average amount of debt was $23,685 per person.
That amount increased last month by $923 under the new indexation rate, which sits at 3.9 per cent, a 10 year high.
The federal government is establishing a Universities Accord to drive reform of universities, under which the cost and affordability of university degrees is expected to be considered.
