15% universal loan fee for HECS/HELP

The Grattan Institute released a report calling for a universal 15% loan fee to be added when student incur a higher education HECS/HELP liability.  Reasoning behind a 15% loan fee is that it would go towards offsetting the interest-rate subsidy students receive as a result of their HECS/HELP liability being indexed at the rate of CPI (currently 1.3%).  That is, a real rate of interest that is zero. As opposed to the Commonwealth Government actual cost of funding which is closer to 2.75% (current 10 year bond yield).  In 2015/2016 this interest rate subsidy was around $550million for the year on total outstanding HECS/HELP liabilities of around $40billion. Bruce Chapman also wrote an article for The Conversation supporting the idea of a 15% loan fee.

Below are my reasons why a 15% universal loan fee is a far better idea than alternative proposals for reducing the funding burden of HECS/HELP. Not just the interest-rate subsidy that makes HECS fair for all types of students with many different backgrounds but also the implicit understanding that some students will fail to repay their HECS liability due to simple bad luck and the uncertainty of life. Continue reading

Deregulation of university fees will leave the disadvantaged at greater debt risk

My article published in The Australian newspaper today:

Deregulation of university fees will leave the disadvantaged at greater debt risk

IF there is one thing we should have learned from the global fin­ancial crisis, it is that free markets, deregulation and government-subsidised debt ultimately end up creating financial bubbles.

Continue reading

School choice and Equity: OECD Literature Review

Pauline Musset’s OECD Education Working Paper ‘School choice and equity, current policies in OECD countries and literature review’ is a great review of research exploring motivations and educational outcomes of school choice policies, with a particular focus on evidence based research.  This working paper is one of the most lucid and succinct reviews of the very contentious area of education policy and its ability to effect educational outcomes.

Some of the topics covered are:

  • self-segregation based on ability, ethnicity or socioeconomic background
  • diversity of schooling
  • performance differences across school types and countries
  • the use of vouchers and the effectiveness of different types of voucher systems
  • how school choice can exacerbate social inequity

I found Pauline Musset’s classifications of the ideological motivations for increasing school choice opportunities for parents particularly useful.  She classifies these motivations into 3 groups:

  • introduction of market mechanisms in education to remedy inefficiencies;
  • individualist-libertarian claims of a parental right for choice in education;
  • school choice as a way of making education systems more equitable.


Musset, P. (2012), “School Choice and Equity: Current Policies in OECD Countries and a Literature Review”, OECD Education Working Papers, No. 66, OECD Publishing.

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