Deregulation to hike uni loan debt bill

The federal government's plans to let universities set their own fees are expected to hike the taxpayer bill on student loans.

Generic photos of Melbourne University in Melbourne on Tuesday January 19, 2010. (AAP Image/Luis Enrique Ascui) NO ARCHIVING

File photo of Melbourne University Source: AAP

The taxpayer bill to put students through higher education is set to balloon if universities are allowed to set their own fees.

New analysis shows the cost of student debt owed to the taxpayer is predicted to soar from $1.7 billion to $11 billion within a decade.

Total exposure will increase more than fivefold to $185 billion by 2025-26.

That's down to a range of past and future government policies including uncapping university places and opening up loans to vocational education.

A Parliamentary Budget Office report also takes into account Turnbull government plans to deregulate university course fees, which it says will be the main driver of the growing loan portfolio.

It predicts student fees will soar by 40 per cent as universities recover costs following a planned 20 per cent government funding cut.

In addition, the PBO projects student fees will increase by two per cent every year.

The debt will be driven by those who are unlikely to repay their loans because they earn below the taxable income threshold.

Those "doubtful debts" will double in a decade to $4 billion.

Concessional loans will more than double in a decade from $1 billion to $2.4 billion by 2025.

Education Minister Simon Birmingham blames the Gillard government for including the "irresponsible and recklessly-arranged" VET fee help program and demand-driven university places for the debt blowout.

"There is no point believing that just by racking up ever-increasing debts today, that somehow Australians down the track will miraculously be able to pay for them," he told reporters in Sydney.

Senator Birmingham said the government would outline its planned changes for higher education in the May 3 budget.

It has already put off until 2017 a planned 20 per cent cut in federal funding and allowing universities to deregulate course fees.

That plan has twice been rejected by the Senate.

2 min read
Published 6 April 2016 at 7:48pm
Source: AAP