The number of Australians with enormous student debts has increased by almost 30 percent in a year, adding impetus to the government’s drive to rein in lending. The total amount of outstanding student debt reached A$54 billion (Rs.2.57 lakh crore) last June, up from less than A$48 billion a year earlier, with more than 14,000 people owing in excess of A$100,000 (Rs.51 lakh) — up from 11,000 in 2016.
Summarised in an Australian Parliamentary Library report, the data suggests that thousands of graduates are struggling with huge debts. The A$100,000 figure has become a byword for unaffordability, with the government’s opponents using the spectre of “A$100,000 degrees” to overcome its 2014 proposal to deregulate university fees. While the population of student debtors has risen by 70 percent this decade, the number with A$100,000-plus debts has multiplied sevenfold.
Under a student loan sustainability bill now before parliament, borrowers will start repaying their debts when their income reaches A$45,000 (Rs.23 lakh) — down from the current A$55,874 — and will be prevented from accumulating debts of more than A$104,400 for study in most disciplines. The new report cites estimates that 25 percent of outstanding debt will never be repaid, although that figure drops to 18 percent if loans for vocational training are disregarded. Another bill seeks to have the two groups of loans administered separately.
Education minister Simon Birmingham says Australia has one of the most generous student loan schemes in the world, and it was “designed with the expectation that a small proportion of students wouldn’t be able to repay their loans”. “With around A$50 billion of outstanding debt and around a quarter not expected to be repaid at the moment, it’s clear the current situation cannot continue,” he says.
On the other hand, the Council of Australian Postgraduate Associations says “penalising students for the cost of their education” is a short-sighted response to the problem. “Imposing a loan balance cap does not address the real problems of ballooning tuition fees and graduates’ difficulties finding stable, fairly paid employment,” says national president Natasha Abrahams. “If the minister is genuinely concerned that some students are unable to pay back their loans, it would be prudent to examine and address the reasons for this rather than devastate opportunity for future students and rip money from lower-earning graduates.”
While student groups bitterly oppose the changes, some university strategists privately hope they pass parliament, reasoning that, if they are blocked, the government may introduce more onerous changes instead.