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Uni funding cuts no answer to higher education financial sustainability

A proposed 20 per cent cut to university funding would inflate growth in Australia's student loan scheme to $185 billion by 2025, a parliamentary report suggests.

The report reveals that the proposed budget cut would actually drive up the cost of the loans scheme - a finding that adds weight to Universities Australia's opposition to the higher education cuts.

A report released yesterday by the Parliamentary Budget Office (PBO) predicted the student loans scheme would grow to $185 billion by 2025 - of which $133 billion is expected to be repaid.

It also confirms that a major driver of the growth in student loan debt in recent years has been the trouble-plagued expansion of vocational education loans. Universities Australia analysis shows that from 2010 to 2014, VET FEE-HELP loans grew by nearly 1400 per cent, accounting for 44 per cent of total growth in HELP loans.

The PBO suggests the main driver of growth in the loans scheme is attributable to increased student fees that would be required to offset a 20 per cent cut in government funding.

The expansion of university access is supported by both sides of politics, given that Australia's transitioning economy will need another 3.8 million new skilled graduates over the next ten years.

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.

"The university sector agrees that the student loans scheme has to be sustainable - without undermining access to university for all qualified students, regardless of their economic background."

This can be achieved by:

  • Cleaning up the well-documented problems in the VET-FEE HELP scheme;
  • Dropping the proposed 20 per cent cut to university funding; and
  • Exploring HELP debt recovery options that do not undermine the fundamental policy intent or objectives of the scheme (as discussed in our policy statement Keep It Clever).

"The HELP system of income-contingent loans is respected worldwide as a fair and effective way to make university accessible regardless of a student's background or financial means.

"Beyond the sustainability of the student loans scheme, the sustainability of the rest of the higher education budget should be more assured in coming years, with new enrolment data for the first half of 2015 showing the growth in new student enrolments has now plateaued."

Universities Australia also welcomes Minister Birmingham's comments on the ABC's 730 program last night that the Government will have "more to say ahead of the election about higher education policy" and we welcome ongoing opportunities for the sector to consult on future policy directions.

We agree with the Minister that Australia's transition into a knowledge economy and the professionalisation of many jobs and now require more Australians to go to university.

Universities Australia Media Contacts

Misha Schubert
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Mobile: 0421 612 351

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