More than 1.2 million students are enrolled in Australian higher education institutions this year and almost every one of them pays for the privilege, including the 335,000 foreign students who must meet the full cost of their courses.
The greater part of the cost to local students enrolled in public universities, however, is met by the government, although students are also expected to make a contribution which varies according to the course and its length. Even then, students can defer the amount they owe as a loan from the government until they graduate, when they must start repaying their debt through the tax system.
The loan system was introduced by a Labor government in 1989 and has enabled tens of thousands of Australians to enrol in university who would otherwise never have been able to afford the cost.
But the total amount owed by current students and those who have graduated over the years now exceeds AUS$15 billion (US$16 billion) and an estimated AUS$4 billion of that may never be repaid because graduates die, leave to live in another country or never reach the income threshold when they have to start repaying their debt.
Students enrolled in a private university must pay the full cost of the course whether they are local or from another country. Each university or other higher education provider sets the tuition fee for each unit of study and the date by which payment of the fee is required.
If eligible, local students enrolled in a public university who decide not to pay the full fee on enrolment, can apply for what used to be called a HECS loan but is now called FEE HELP (Higher Education Loan Program). They then have two alternatives: they can pay some of the tuition fee up-front and request a HELP loan for the remainder or request a loan for the full tuition fee.
The government lends the amount of any tuition fee for each unit of study that has not been paid direct to the institution. The loan is available to any domestic student throughout their lifetime so if they complete one degree and wish to study for another, they can continue to take out a loan up to a certain limit.
This year, the limit to pay tuition fees over a lifetime is AUS$86,400 for students not undertaking a medicine, dentistry or veterinary science course; otherwise the limit is increased to AUS$108,000.
Graduates start repaying their loans once they start work and are earning a certain sum. Repayments vary from 4% of annual income starting at AUS$50,000 and rise to 8% for someone on an annual income of AUS$83,400 or more.
Graduates who earn less than AUS$45,000 a year do not have to repay any part of the loan and if they never earn more than that, then they have obtained a degree for only the cost of their living.
No interest is charged on the debt although the accumulated debt is indexed each year. A loan fee of 20% applies to HELP loans for undergraduate courses so a student borrowing AUS$5,000 to pay for a course will incur a fee of AUS$1,000. Students or graduates can make voluntary repayment of AUS$500 or more and receive a bonus of 10% when their account will be credited with an additional 10% of payment.
As well as covering tuition costs, the government provides income support for eligible students through certain living allowances that depend on family income and whether the student is an Aborigine.
As well as the HELP scheme, there are a number of Commonwealth and privately funded scholarship opportunities available to eligible students to assist with the costs associated with undertaking higher education. Local and foreign postgraduates undertaking a research degree can apply for a scholarship that covers living and other costs for two years, in the case of a masters by research or three years for a PhD.
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