The Federal Government has made its second move in weeks to neutralise universities as an election issue, by announcing discounts on HELP scheme study debt and new funding for students doing course-compulsory work placements.
The much-hinted prac announcement is for 68,000 eligible HE and 5,000 VET students in teaching, nursing, midwifery and social work courses. It will pay them $319.50 a week while on clinical and professional placements and while means-tested, is additional to any other income support (presumably including funding from State Governments). It addresses the “placement poverty” problem, where students have to give up jobs while on pracs, especially if they are away from home.
And as all-but-universally-anticipated, there is also some help for graduates. The indexation rate applying to HELP loans will be the lower of the Consumer Price Index or the Wage Price Index, backdated to June 2023. Last year’s HELP interest increase was 7 per cent, twice wage rises. This year’s rise was set to be 4.7 per cent, also well above inflation.
Overall, average HELP debt across the nearly 3 million people paying off loans is around $26,000, but the recent surge in inflation has made paying back principal and indexation daunting for recent graduates and is no doubt terrifying for students now in business, law and humanities who are slugged $16,000 a year in course costs, under the Coalition’s Jobs Ready Graduates policy, which is still in place.
Using wage instead of consumer price growth will not silence policy commentators. Andrew Norton suggests high inflation applies to both and that the government should cap indexation at 4 per cent, or the CPI, whichever is lower. And the modest credit grads will get, $1,345 for last year and this on debt, will not quieten claims that the government should end indexation altogether – although it is not often mentioned that this would erode the value of the $69bn in HELP debt on the government’s ledger, over time.
This is all super smart politics.
Funding for prac placements demonstrates that the government values degrees and diplomas that deliver core community service. And it supplements the HELP sell.
“Placement poverty is a real thing. I have met students who told me they can afford to go to uni, but they can’t afford to do the prac,” Education Minister Jason Clare says.
And lest anyone miss who prac funding will help, he adds, “the majority of students and workers in these critical care fields being women, the payment also helps implement the Government’s gender equality strategy.”
The new HELP indexation rates starve the Greens of oxygen by reducing payments while sticking to the principle of HELP as a loan, not a gift. The claim by Coalition treasury and education shadows Angus Taylor and Sarah Henderson that inflation under Labor makes the change, “all trickery and deceit” will likely be ignored by opponents of JRG.
And, while student debt is not reduced, it gives the government a big Budget number to announce. “This action taken will wipe around $3bn in student debt – easing pressure on workers and students across the country,” is the pitch. Such a big number that Education Minister Jason Clare will be able to quote it as demonstrating the Government’s commitment to higher education, if there is not much more money in the Budget for Accord projects.
Universities Australia recognised reality yesterday, making the most of the announcement.
“We know cost-of-living is factor in people’s decision to start and finish university and this relief will give people more confidence in pursuing a degree while providing much-needed support for those already paying off a HELP debt,” UA CEO Mr Luke Sheehy said.
A line which Mr Clare will likely quote as well.
