Proposed Cost-Shifting In Australia
Career College Central summary:
Students should pay higher interest on their loans and relieve the pressure on the public purse, a committee studying how to control spending by the Australian government recommends. “The interest rate should be increased to a level which reflects all (the commonwealth’s) costs in making the loan,” says the report by the Commission of Audit, noting that the current rate falls below the government borrowing rate.
Australian National University economist Bruce Chapman, architect of the internationally adopted income-contingent loan scheme, pointed to the New Zealand experience. He said that New Zealand had adopted Australia’s system but imposed an interest rate in line with the government cost of borrowing.
A graduate returning after a short spell overseas could find a $20,000 debt transformed into $35,000, thanks to compound interest, he said. It was perceived as unfair, he said, and proved so politically unpopular that the full cost recovery interest rate was abandoned.
The audit report also urges “a rebalancing” of public and private contributions to the cost of degrees, so that students would pay 55 percent, rather than the current 40 percent, of the cost of their educations, thereby delivering savings to government.
Click through for full article content.
INSIDE HIGHER EDUCATION