The Social effects of the Australian Higher Education Contribution Scheme (HECS)

Abstract

Australia's Higher Education Contribution Scheme (HECS) is an income contingent loan scheme, in which university students pay back part of the costs of their tuition after their post-university income reaches a certain threshold, is an important policy innovation for the financing of higher education. However, its critics claim that HECS increases socioeconomic inequalities in higher education and the HECS debt reduces the ability of young people to make the transitions to adulthood. This paper investigates these claims. There is no evidence that socioeconomic inequalities in higher education in Australia increased after the implementation of HECS in 1989 or the 1997 reforms. The magnitude of the HECS debt was found to have a negative impact on the transition to parenthood, but had no negative impacts on other transitions to adulthood: leaving the parental home, marriage and home ownership. Its effects on parenthood were moderate compared to other influences, such as full-time work in the previous year, marriage and being in a de facto relationship. Furthermore, only a small proportion of young people who attended university have large enough HECS debts for it to affect their fertility decisions.

Returns to education for those returning to education: evidence from Australia

“…Since 1989, university students have been required to make a contribution towards the cost of their higher education through an income-contingent student loans scheme (Chapman 1997;Marks and McMillan 2007). Originally, all courses attracted an equal level of student contribution; however, in 1997 and in 2005 further policy changes were introduced which resulted in different charges being levied for different courses (see Marks [2009] for a full review).…”

The E12 experience: Students’ perceptions of a widening participation scheme

“…Previously, the HECS scheme offered students a discount (ranging between 10-20%, depending upon when a student commenced university) for paying fees upfront. However, this raised questions over the equity of the scheme as the option of paying a discounted fee upfront is more likely to favour students from higher socio-economic backgrounds (Birch & Miller, 2007;Marks, 2009).…”

Trajectories of higher education system differentiation: structural policy‐making and the impact of tuition fees in England and Australia

“…HECS is paid back through the taxation system (BIS 2009a) and those on higher incomes have a higher rate of repayment than on lower incomes, although the total amount repaid is independent of the level of income (Marks 2009). The system has subsequently been the subject of several changes, including increased course fees, changes to the original cost structure from a flat to a three tier structure (depending on subject studied), and raising the raising of the threshold level for repayments.…”

“…Other Conservative reforms to HECS included encouraging students to pay the tuition fees upfront by offering substantial discounts (25%) 2 , changing the repayment schedule and allowing universities some flexibility in the fees they charge for particular courses, in effect raising the cap on tuition fees (Marks 2009, 73, Chevaillier andEicher 2002). A system of FEE-HELP was introduced in 2005 whereby those paying full fees could borrow up to A$50,000 for, raising fears that this might adversely affect the chances of poorer, debt-averse students wishing to enrol on more expensive courses (Chapman 2004, Marks 2009, Universities Australia 2008.…”