Student debt soars, incomes fall below poverty line

More Australians are attending university than at any time in the past 150 years, but most now struggle to live on incomes that are below the poverty line while their levels of debt have soared by almost 30% in the past six years.

Many students graduate owing so much money that it will take years to repay and leave them facing a life without ever owning a home.

A report released on Monday by Universities Australia on the financial circumstances facing local and overseas students, from newcomers to postgraduates, says most are experiencing far greater levels of financial distress than ever before, with more than two-thirds reporting being worried about their financial situation.

The report says the situation is worse for students from poorer families and indigenous backgrounds, with the great majority experiencing severe financial distress. Based on a survey of nearly 12,000 students across the university sector, the report says the financial demands on almost half of all students outstrip their earnings.

The survey found that 80% of full-time undergraduates work an average of 16 hours a week; a third regularly miss classes because of their jobs; and 17% said they often went without food or other necessities.

Half the students said the demands of their jobs negatively affected their performance at university – a 10 percentage point increase since the previous report on student finances was released, in 2006.

These surveys have been conducted every five years since the mid-1970s and, although they have always offered a grim picture of students struggling to survive at university, the latest report is almost Dickensian in its presentation of students trying to cope with the demands of study and the need to make some money for food and clothing.

The 113-page report says more than a quarter of employed full-time undergraduates work more than 20 hours per week yet two out of three earn less than A$20,000 (US$18,215) a year, which is below the poverty line, and that includes 21% who try to live on incomes of less than A$10,000.

As a result, half of all undergraduate students rely on some form of financial support from their families.

“This report clearly shows that financial stress on university students is increasing,” said Belinda Robinson, chief executive of Universities Australia, the peak body representing Australia’s universities.

"While the impact of this on dropout rates and future enrolments is unclear, it is of sufficient concern to justify close monitoring – particular in the context of meeting the government's goal to have 20% of students from low socioeconomic backgrounds enrolled by 2020.”

Dramatic changes since 2006

The report notes that Australian higher education has changed dramatically since the previous longitudinal study of university students’ finances, in 2006.

The changes have led to large increases in participation in higher education, “particularly since the uncapping of domestic undergraduate places last year”. There are many older students entering the system, as well as more students from families in which a university education has not been the norm.

The report acknowledges welcome increases by the government in student income support and the extension of income support to many masters-by-coursework students, as well as a greater focus on equity than was the case previously. But it also highlights the grim financial situation most students face.

“There has always been a degree of diversity present in the student cohort, yet the present study indicates that this diversity is increasing, such that it is difficult to describe what an ‘average’ student might be,” the report notes.

“For example, reliance on income from allowances from family has increased as a proportion of undergraduate student income since 2006, but so too has reliance on income from government.

“Fewer students are working in paid employment, but those that are working are working slightly longer hours. This suggests a greater stratification of students according to their financial means.”

International students

The report found that the average income for international students is “not dissimilar” to that of domestic students, although they earn a substantially smaller proportion from paid employment and a substantially larger proportion from regular allowances.

It says three out of every five foreign undergraduates are living on incomes of less than A$20,000 a year, although a quarter of undergraduates and one in five postgraduate coursework students have incomes of less than A$10,000 a year.

“In 2012, the average amount of savings expended by international undergraduate and postgraduate coursework students was much greater than that by domestic students. For undergraduates, the amount was nearly four times as much of their savings, at an average of A$10,008, and for postgraduate coursework students, more than twice as much, at A$11,274,” the report says.

Because their visas restrict the number of hours they can work, foreign students are less likely than their local counterparts to have paid jobs, and they work fewer hours per week.

Nevertheless, more than half of foreign students had been in employment at some time in the past 12 months and, on average, they work between 11 and 17 hours per week during the semester, the report says.

Lecturer union response

Commenting on the report, the National Tertiary Education Union (NTEU) said Australian students paid among the highest tuition fees to attend a public university in the world.

Fees are repaid by students, when they graduate and are working, through Australia's income contingent HECS scheme, and range from A$18,000 to A$60,000 a year, said NTEU President Jeannie Rea.

“The report confirms that student debt is rising. Between 2006 and 2012, the average real [adjusted for inflation] level of debt for an undergraduate student rose from about A$29,000 to A$38,000; an increase of A$9,000 or 30%,” Rea said.

“This rapid increase in student debt confirms the union's own estimates, which indicate that HECS debts are rising at a rate of about A$12 million every day. By 2016, the level of outstanding HECS debt owed by Australian students will be larger than the nation’s credit card debt currently hovering around about A$50 billion.”

Rea said it was a national disgrace that almost one in five university students reported going without food and ended up graduating with an average debt of almost A$38,000. It was unacceptable that 17% of students regularly went without food and other necessities.

“A university degree should be built on more than two-minute noodles,” she said.


One Aussie university in Wagga Wagga made me owe my creditors US$13k and wanted more because they didn't want to pass me. I literally dropped out of the programme to incur less debt.

Zhen Jun on the University World News Facebook page

I accept the rites of passage idea that as students one does not expect to be making much money. However, while there is orchestrated demonisation of fee paying international students (subsidising domestic), and Australian students being confronted by not just fees and graduate unemployment, but years or decades of debt, is the university model sustainable vs more nimble private, TAFE or even overseas for less fees?

Andrew J Smith on the University World News Facebook page