University students will pay an average of $50,000 for a three-year degree by the middle of the next decade should the federal government succeed in deregulating fees, analysis by the independent Parliamentary Budget Office shows.
Subscribe now for unlimited access.
$0/
(min cost $0)
or signup to continue reading
The fee estimate is included in a PBO report revealing a huge blowout in the cost of the government's Higher Education Loan Program (previously known as HECS).
In the 2014 budget, the Coalition announced that it would cut funding to university courses by 20 per cent but allow tertiary institutions to set their own course fees.
The changes were torpedoed in the Senate and last October the newly appointed Education Minister, Simon Birmingham, delayed university reforms until 2017.
The PBO factored the government's fee deregulation policy into its analysis of the rising cost of student loan assistance.
The report said fee deregulation, along with Gillard government reforms to remove a cap on university places and expand HELP loans to vocational education, would drive up the cost of the HELP scheme over the next decade and put significant pressure on the federal budget.
The PBO said universities would lift course fees to recoup revenue lost due to funding cuts linked to fee deregulation.
It calculates that by 2026 the average annual fee for a full-time university student in a Commonwealth-supported place will be $16,836, or about $50,500 for a three-year degree. Fees for some prestigious courses at top universities would likely be much higher than that average.
The PBO also said 19 per cent of HELP loans are now "doubtful" but that is forecast to rise to nearly 22 per cent by 2025-26.
By 2026, $4 billion worth of new loans will probably never be repaid and have to be written off each year, up from $1.9 billion currently, the PBO said.
In November, the government introduced legislation requiring all Australian graduates living offshore to start making loan repayments, based on income beyond the $53,000 threshold in the 2016-17 tax year.
It is estimated about $30 million is lost annually due to graduates moving overseas.
A recent Grattan Institute report found the student loans scheme is "overly generous and poorly targeted" and will continue to balloon without reform.
The report called for graduates to start repaying their debts when their income hits $42,000 a year – below the current level of $54,126
The institute's higher education program director, Andrew Norton, said there were several reasons why many loans would never be repaid, including graduates who are never employed, do not finish their degree or who only ever work part-time, as well people who commit "outright tax evasion".
"Part-time work is a major factor [in loans not being repaid] and there are relatively affluent people who could repay but are not repaying because their part-time income does not reach the threshold," Mr Norton said.
"There are also those people who do not submit tax returns and so they are not making HELP repayments and the ATO [Australian Tax Office] is very lax in chasing those people."
Universities Australia chief executive Belinda Robinson said the PBO report projections "vindicated the university sector's strong and consistent opposition to the proposed 20 per cent funding cut".
"This confirms that the proposed cut is a 'false economy' – in fact, it would ultimately cost taxpayers and the budget more," she said.
