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Rumours have been going on for a few weeks and now it has been more or less officially confirmed – Australian Minister of Education Christopher Pyne stated that the Australian government is not ruling out the possibility of selling off the country’s AUD 23 billion (EUR 16 billion) student debt. The Australian government is investigating the possibility of privatising some of its assets and is thus considering selling off the government-owned health insurer Medibank, parts of Australian Post or the accumulated AUD 23 billion debt of the Australian Higher Education Contribution Scheme-Higher Education Loan Programme (HECS-HELP).
The Higher Education Contribution Scheme was introduced in 1989 in order to make higher education more accessible among the Australian population. The Australian loan scheme covers tuition fees and allows students to repay their debt through the tax system. This means if the annual income of a former beneficiary of Australian loan programme reaches a certain level, a repayment rate between 4 to 8 % depending on the total income will be automatically deducted by the Australian Taxation Office. Although the Australian system is basically a loan scheme, it strongly resembles the idea of a ‘graduate tax’ which has been vaguely discussed as a funding model for higher education in the United Kingdom and in Ireland.
Given the fact that the HECS-HELP model is only applicable to Australian beneficiaries who reside and pay taxes in Australia from a given income level onwards, clearly not all costs of this loan scheme programme are covered. In addition, as no interest rate applies to the HECS-HELP model, the total debt amount increases by means of annual inflation. Consequently, selling off the HECS-HELP debt to a private owner would ease the burden of public debt. Yet, such a step would partially undermine the original aim of the HECS-HELP model. Privatising student debt would most likely lead to the imposition of interest rates. This measure has been harshly criticised by the Opposition and the Australian National Union of Students.
At this current stage, a final decision of securitising Australia’s student debt has not been taken yet and it remains to be seen which pathway will be pursued by the Australian government in its attempt to resolve the problem of public debt.