HECS cuts have passed the Senate. Will they make university fairer?

Australia Broadcast Center

5 days ago

Labor's pre-election pledge to cut student and apprentice loans by 20 per cent has now passed parliament, becoming the first piece of legislation enacted by the newly re-elected Albanese government.
"We promised it and we've delivered," federal Education Minister Jason Clare told reporters on Thursday morning.
The bill passed on Thursday also contains an increase in the repayment threshold, meaning a debtor can now earn up to $67,000 a year before the minimum repayment kicks in.
Mr Clare said raising the threshold makes the system "fairer".
The pledge to cut debts was evidently popular with many voters during the 2025 election campaign, and comes at a cost of about $16 billion.
Student organisations, industry groups and independent politicians say there are other ways of spending that money to fix the tertiary sector. Here's what they're calling on the government to do.
In 2021, the Morrison government changed the way university fees were structured through a program called Job-ready Graduates. The scheme aimed to use price signals to drive enrolment in courses in areas of skills shortages like nursing, mathematics and agriculture. Course fees for those subjects fell, while the cost of courses in history, law and media increased.
Analysis from the University of Melbourne in 2023 found that the program was having a minimal impact on student enrolments, with less than 2 per cent of students choosing to enrol in a course they otherwise wouldn't have because of the scheme.
"The Job-ready Graduates package is holding Australia back. It's time to replace it with a system that actually supports our future workforce," head of Universities Australia Luke Sheehy told triple j hack.
Even the Coalition's spokesperson for education, Jonno Duniam, acknowledged that it should be scrapped.
"The point has been made that the program isn't working. If a program isn't working, whether it be ideology or otherwise, there's no point sticking to it," Mr Duniam told triple j hack.
The Greens and independent MP Monique Ryan wanted amendments to the bill to cut HECS and HELP loans that would immediately end the "unfair" Job-ready Graduate program.
"Labor should have dumped Morrison's Job-ready Graduates fee hikes the second they came into power. The scheme is a cruel, punitive mess that does nothing except punish students with high fees," Greens education spokesperson Mehreen Faruqi said.
The government would need to legislate to change the existing fee structure, but any such bill would have the support of the Greens and other key crossbenchers, like independent ACT senator David Pocock.
The Universities Accord, a broad-ranging review of the higher education system, found that Australia would need 80 per cent of its workforce to have a tertiary qualification by 2050 to be globally competitive.
To achieve that goal, the proportion of disadvantaged students with a qualification will need to drastically increase. Of the entire student population in 2023, just 2.2 per cent were First Nations, 12 per cent had a disability, 15 per cent were from low socio-economic backgrounds, and 18 per cent were from rural and regional areas, according to figures from Universities Australia.
The Accord recommended implementing a needs-based funding model for universities like the Gonski funding model used in schools, which allocates more funding to schools with a greater number of students who have higher needs.
The government has set up the interim Australian Tertiary Education Commission to work out the new funding model, and has pointed to the work underway by this body as a reason why it won't immediately scrap the Job-ready Graduate program.
But Ms Ryan said the government shouldn't wait for the new funding model to scrap Job-ready Graduates.
"The Australian Tertiary Education Commission won't be functional till 2026, and is not going to be able to change university fees till 2027. We have young people studying arts and law degrees this year, spending more than $22,000 a year on those courses," she said.
"They should have been doing the work to get a new model in place over the last three years. What have they been doing on Job-ready Graduates for the last three years? There's urgency here," Senator Pocock said.
Last year, the government introduced changes to the way student loans were indexed. Indexation refers to the way existing debts are calculated to consider fluctuations in inflation, year on year.
The changes would see indexation based on either the consumer price index, which calculates inflation, or the wage price index, whichever is lower.
But student groups, the Greens, independents and the Coalition say that shouldn't be the end of it. They want more change in this space.
Independents like Ms Ryan and Senator Pocock want the government to change the timing at which indexation is applied.
Currently, HECS-HELP debts are deducted from a debtor's pay cheque, but the overall amount owed doesn't decrease until after the debtor has filed their tax return. Debts are indexed annually on June 1, before tax returns are lodged, which means the amount indexed and added to the debt does not reflect the amount owed.
Former shadow education minister Sarah Henderson said the government should cap indexation at 3 per cent.
"Australians with a student loan or those planning to undertake tertiary studies should not be blindsided by high indexation driven by high inflation, as has occurred under Labor over the past three years," Senator Henderson said.
The National Union of Students wants debts to be frozen during periods of high inflation.
"It is outrageous that during a cost-of-living crisis, the Australian government would profit billions of dollars off of student debt," former NUS president Bailey Riley told a Senate inquiry.
The Greens also want to scrap indexation altogether.
"Unless indexation is removed, students will be in this hamster wheel, always chasing their debts, which keep getting bigger and bigger," Senator Faruqi said.
From July this year, students undertaking compulsory work placements as part of a nursing, teaching, social work or midwifery course will be paid to undertake those placements.
But the government is under increasing pressure to extend the payments beyond the four existing courses to other allied health and medical courses.
"It really is odd to exclude our medical students from the same financial help other students receive while expecting them to undertake practical placements, often in rural, regional and remote areas," the president of the Australian Medical Association, Danielle McMullen, said.
"Psychologists are only meeting 35 per cent of the federal government's psychology workforce goal, and exclusion from the paid placement scheme will entrench this shortage," head of the Australian Association of Psychologists Tegan Carrison said.
Occupational therapy student Arabella Hely told triple j hack that allied health students are dropping out because they can't afford to live without income during their compulsory placements.
"I know I've had to drop down to part-time study to be able to support myself. So many people are dropping to part-time study or deferring completely."