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Labor’s calculator of doom

The Australian      |      31 October 2014

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 As part of its growing campaign against the Abbott government’s deregulation of university fees, Labor has launched its own “calculator of doom” which shows that in a “best case” scenario in which universities simply raise fees to cover proposed funding cuts, female nurses and teachers could face cost increases of about 60% once interest repayments are included.

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Fee increaseUnder the best case scenario, a female nurse would end up repaying $32,245 for her three-year degree over nine years, up 66% from $19,410 under current arrangements. If prices rose to international student levels she would eventually repay $56,643 over almost 15 years.

A male business student under the best case scenario would see their total repayments rise just 27% for a three-year degree to $43,656 that would take 8 years to repay. But if fees rose to international market levels, his repayments would rise to $94,473 and take almost 13 years to repay.

Under a “worst case” scenario, if prices were to rise to international student levels, the total cost, including interest, of a three year business degree, based on a graduate’s median earnings, would rise to over $94,000, and the cost of a four year law degree would rise to over $125,000. A female veterinarian under the worst case scenario would never repay her debt by the time she retired at age 65 having repaid a whopping $437,310, almost all of that being interest charges.

The calculator is based on modelling commissioned by Labor from the University of Canberra’s National Centre for Social and Economic Modelling.

Education minister Christopher Pyne said the modelling has “no credibility” noting that NATSEM was housed at the University of Canberra whose vice- chancellor Stephen Parker has been outspoken in his total opposition to fee deregulation.

NATSEM principal research fellow Ben Phillips said the research had been entirely independent. He said the modelling assessed plausible scenarios but that it was impossible to predict what would actually happen to prices. “These are possibilities. How realistic they are I can’t say,”

Andrew Norton of the Grattan Institute was reluctant to dismiss the modelling.

The calculator is clearly political but the assumptions aren’t outrageously wrong, they just aren’t necessarily right.

And that’s the point: unless and until a deal is done on the package – and universities have set their fee regimes – we just don’t know what loan debt future generations of students will be carrying.

Universities have argued, for example, for  a  lesser cut to university funding than the 20% currently proposed and for a FEE-HELP interest rate  pegged to CPI rather than the bond rate.   It’s also being argued that the proposed extension of public subsidies to non-university higher education providers be deferred for up to three years.

The Greens launched its own calculator in June.

 

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