Adelaide VC welcomes Norton reforms for student loans

Sunday, 6 April 2014

University of Adelaide Vice-Chancellor and President, Professor Warren Bebbington has welcomed Grattan Institute Higher Education Program Director Andrew Norton's suggested reforms on student loans announced earlier today.

"Andrew Norton's latest report Doubtful Debt: The Rising Cost of Student Loans offers Minister Pyne a realistic and achievable solution to university funding problems. He should take this report very seriously," says Professor Bebbington.

The report notes that lending to university students on the scale happening now under the "demand-driven system" was never intended. The Commonwealth Government currently has over $6 billion in doubtful HELP debts, which will grow to over $13 billion by 2017.

"Even worse, the Government has $1.1 billion it expects never to be able to collect," says Professor Bebbington. "It's an impossible, unsustainable situation."

"Unless something is done soon, universities could face more of the massive cuts already projected for the sector," says Professor Bebbington. "More alarming is the risk that the government may be tempted to bring on reforms that might dilute the great benefits to students the HELP scheme brings."

Norton's report has shown that the major causes of the bad debts is attributed to students who have moved overseas and subsequently don't repay their loans, and also the Commonwealth writes off the debts when a student dies. This is unlike New Zealand and the UK, where any student who has, moved abroad must still make a flat annual payment.

"Asking graduates living overseas to pay their HELP debts and collecting it from deceased student estates could save $860 million a year," says Professor Bebbington.

"This would make a profound difference to the future government funding of universities. It would mean the kind of cuts currently proposed to teaching and research under the 'efficiency dividend' would be unnecessary.

"We need this kind of major policy reform to ensure the Australian university sector can not only survive but flourish in the long-term," he says.

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