Good question Tim.

<"If we believe that human capital is Australia's most valuable asset over the longer term, why do we burden our brightest and best with such debts just when they are trying to get a start in life?>"

There is an intergenerational war brewing in Australian society, it has even reached my little back water remote town.

My friends daughter was discussing the Grattan Institutes report with her Mother and myself, she said, and I quote, " All these baby boomers that got their university education for free, now want to burden us with ever increasing fees and debt, and devise new ways they can screw us. They're like a plague of locusts, big bloated and destructive, using up resources, killing our planet, and always wanting more, more, more. They aren't going to be around to have to clean up the mess.

They wont even retire now, so if younger people want a job its a case of dead man's shoes, 'cause retiring on the pension is not enough for them, even though they own their home, and have superannuation. They buy up all the houses, and push the prices up so that no one else can afford to have a home of their own.

Even when I graduate I don't know if I'll even get a job, and chances are it will be casual or contract, so I wont even have the chance to get a mortgage, even if I manage to pay off my uni debt."

I don't believe that those in power think that human capital is Australia's most valuable asset, either now or in the longer term, if they do, they have a very strange way of showing it.

Excellent point - I'd just like to comment on another other side of this argument as well. I can remember the introduction of HECS and how it was justified, allegedly because university education primarily benefits the recipient and not society as a whole. This has always seemed to me one of the most ridiculous things I have ever heard. No one gets a single cent for having a university degree, the money comes from being paid to do a highly skilled job and anyone who thinks they don't benefit from having qualified people doing these jobs is simply living in a fantasy land.

"They buy up all the houses, and push the prices up so that no one else can afford to have a home of their own."

A small fraction of them do. But when you're developing a stereotype like this young woman was then inconvenient realities like inequality get swept under the rug. It is true that a small fraction of previous generations profited mightily from effort-free and often tax-free capital gains on land and other assets. I just wish she'd save her scorn for that lucky minority than indulge in age-bashing.

Seems excessively gloomy. What's the HELP damage?

HECs/HELP has been around for a little while now, doesn't appear to have resulted in an inter-generational war just yet....

Things can always look worse than they are... at least until you get a job start paying back the cost of your course (with extra voluntary payments to get it off your back faster), then later down the track promotions.. and then the (relatively) higher income required to qualify for a mortgage (double income helps).

Unfortunately Chris, my friends daughter is not alone in the way she thinks of the baby boomer generation. I find it hard to blame her for creating a stereotype, as she has good teachers in those that treat all students as lazy, all unemployed people as bludgers, and all single parents as sucking up taxpayer money.

She sees the age of those that are vocally and ignorantly ignoring the science of climate change, and are against doing any thing about it, particularly if it hits their pocket. She see weak politicians that are all of that generation, engaging in mud slinging and pandering to the rich and powerful, (also of that baby boomer generation). She sees the affluent baby boomers discussing their investment houses, while she faces a life where she will be lucky to have a job, despite all her efforts to educate herself, and little hope of having a home of her own. She sees a future of a huge education debt, that those that created the system never had.

Young people are looking for someone to blame, and in some ways they are justified in their anger at the baby boomer generation. The truth is not age bashing.

The HELP damage will be about 70k for my friends daughter. A debt that her parents didn't have when they finished their studies, and were able to start their family, and buy their own home on one full time income.

These young people are justified in their resentment IMO.

There is no guarantee of a job, and certainly no guarantee of a job that is permanent full time, to enable someone to have a mortgage.

Wow that's quite substantial.

It would appear that on average most courses cost a good deal less than this.

Based on this link (and my calculations) should cost around $15,000 - $20 500

http://www.usc.edu.au/university/news-and-events/vice-chancellor-and-presidents-weekly-column/archived-columns/2005/CostUniversityDegreeColumn.htm

There is no guarantee of job (or at least a specific type of job), however employments rates for graduates in Australia do seem to be very high.

Just an amusing story to highlight the point:
A fortune 500 company executive watched an external specialist fixing one of his critical servers in the company server room. The specialist arrived connected to the server read a few lines of code and typed in a few instructions then disconnected - total time 3 minutes and the global company was back to work. He asked how much? $5,000 replied the specialist. The executive refused to pay saying he would require an itemized bill for the job. Next day the bill arrived:

3 min. work @ $500 per hour = $25
Pro-rata for repaying years of premium priced specialized education = $4975

I know it's a fictional story, but the average IT grad probably doesn't need to charge excessive rates in order to pay back his/her student loans.

Ie; if the max average loan amount is $20,000 and min average grad wage is around $45,000 (IT is around $96,000, specialist more like $130,000) it shouldn't take that long for the IT professional to repay his/her student loan.

http://content.mycareer.com.au/salary-centre/graduate
http://content.mycareer.com.au/salary-centre/graduate/graduate-it-telecommunications
http://www.usc.edu.au/university/news-and-events/vice-chancellor-and-presidents-weekly-column/archived-columns/2005/CostUniversityDegreeColumn.htm

Hi Judith,

I agree with your friends daughter. I started university doing engineering when HECS started and I still haven't managed to pay off my debt. I certainly resented that the architects of the system enjoyed free tertiary education while I could not.

I have also not enjoyed a higher income or job security since engineering jobs generally don't mix well with having children and needing a part-time job. When my children were old enough for me to rejoin the workforce, I spent half of my interview time explaining why there are such large time gaps in my resume and that I am still capable of performing the advertised work. Thankfully I did eventually find an employer who was willing to take me on, but to secure the job I was compelled to ask for much less than the going rate for graduate engineers.

I am now enjoying free tertiary education in Finland, and its wonderful! We should all agitate for a return to free tertiary education in Australia, because if Finland can afford it there is no reason for Australia not to make such wonderful investment in its future tax payers as well.

I sincerely hope that your friends daughter at least sees her studies as interesting and worthwhile to her future life.

Hi Lydia, my friend's daughter will be looking at working overseas once she has completed her degree. There are not many options for employment in Australia, and science graduates, despite all the hype about Australia being the smart country, often cannot find employment in their chosen fields.

She doesn't want to spend the first years after graduation doing casual or contract work, trying to survive on Newstart, and being treated like cr*ap because anyone that doesn't do whatever menial job they can get, is somehow a bludger.

I have no doubt this very smart young woman will do very well, it's just unlikely that she will do very well here in her own country.

There are obvious dangers in studying a niche or specialty degree particular in a nation such as Australia; who's population is quite small (relatively).

The other important factor to consider here is that a large number of countries that operate in Australia are multi-nationals that may very well be conducting R&D (basically science) in their country of origin, or in some other nation that has a competiive advantage in research that may have less restrictions on research or a greater number of skilled workers capable in the desired fields. ie the following nations have high levels of R&D spending (including private spending) and also large populations (including large numbers of skilled workers):

*USA (pop313,914,040)
*Japan (127,817,277)
*South Korea (49,779,000)
*China (1,344,130,000)

I do think (referring to your 2nd paragraph), that if you are unable to find work in your local area and unwillingly to relocate (understandably not always possibility) that you should be willingly to seek other forms of work.

I do recall that the definition of bludger is someone that is not working, unwillingly to find work and content to live on welfare.

- Not applicable in the case of your friend's daughter as she's obviously well educated and motivated enough to find work even O/S.

Hi Judith,
Might I suggest that your friends daughter look at going overseas now? There are many European universities that offer degrees in English without having to pay fees or at least only incurring modest fees. These degrees are very international, with students from every corner of the world attending. Plus very many of them have subsidised student accommodation and with the strong Aussie dollar it makes it even cheaper to head over. As a final incentive, once you are studying overseas you are in the loop with job offers e.g. I get many emails about current jobs that are available across Europe and the UK in science and many of them do not require proficiency in languages other than English. I've heard that sometimes Australian Universities even have exchange programs with some of these universities which may make life a little easier for the application process.

"There is no guarantee of a job, and certainly no guarantee of a job that is permanent full time, to enable someone to have a mortgage."

This is the way things have usually been since 1975. Baby-boomer graduates had the same problem then, the only real difference was that there was no scapegoat name like "baby-boomer" for them to blame.

"She sees the affluent baby boomers discussing their investment houses"

The age group that usually contains (as a small minority) the richest and most powerful people (50-65) is now occupied by baby-boomers. Complaining about a whole generation as if they are all the same and as if other generations never were or never will be similar is ignoring the real issue, inequality. You might not blame someone for having a deficiency in their thinking, but that doesn't stop it from being a deficiency.

I disagree, baby boomer graduates did not have any where near the same difficulty gaining full time employment as students do now. There was also not the casualisation of the work force, that there is now. Baby boomers faced their own type of problems, no one is denying that, there was in the 1970 a lot of gender discrimination, and and pay inequality, although that still exists now, it is no where near the same extent.

I don't agree that baby boomer is a scapegoat name, it is no different from being a gen x or gen y, or whatever, it merely describes the generation.

My friends daughter has a stereotypical view of baby boomers, which has some truth to it. I don't agree with it, but I can see her point. As I said in another post, she is simply doing what others do to her generation, she has good teachers in how to form stereotypes and blame them.

I agree, the real issue is inequality, but what you have failed to acknowledge is where that inequality came from.

David as the people who were interviewed for the article and as several others in comments have said there is no burden to society associated with unpaid student HELP debts. There is only a burden if unpaid debts become greater than the value added to society from the increase in skills and knowledge of the total of all recipients of student loans.

In what sense are recipients of students loans benefiting society if they are unable/unwilling to repair HELP debts, presumably as they are unemployed, earning less than the threshold to payback as part of taxes, or overseas?

Of course there is a burden in the sense that the uni (or other education provider) is incurring a cost/expense that is then being covered by the tax payer - unless this is being subsidies/covered for by international student fees?

University graduates have higher levels of civil engagement and tolerance than others, increasing the community's social capital.

If university graduates are engaged in a productive activity - not necessarily in highly paid work - they are likely to contribute to their workplace more knowledge and skills and thus increase their workplace's productivity in addition to having higher personal productivity.

Little of this is measured accurately and even less is costed, so it is hard to express this contribution financially.

That's a fair point.

However I didn't believe the threshold to paying back HELP was that high a wage?

Hi Nick

When Australia had an elite system of higher education with fewer than 5% of the relevant age group participating (Trow, 1974) then it was regressive for universities to be funded fully by the public. When we moved to a mass system (c5%-35%) then the argument for public funding became stronger.

Now that we are moving to a 'universal' or open access system with about half of the relevant age group participating in higher education then participation becomes more of an expectation than a privilege and the arguments for funding higher education like post compulsory secondary education become stronger still.

However, Australia is a low taxing OECD country so governments are always seeking ways to shift costs to the public.

Trow, Martin (1974) ‘Problems in the transition from elite to mass higher education’, in Organisation for Economic Co-operation and Development (OECD) Policies for Higher Education, OECD, Paris, pp 51-101.

I'm not sure that the point raised in your third paragraph is valid.

While it is probably true that most students will look to study a degree and subjects that is likely to allow them to repay their upfront fees and/or student loans, this doesn't preclude students from choosing electives (and my understanding is that most course have these) that may not be 100% related to their overall degree.

Ie; I studied business & IT and was able to use my electives to also study a language whilst at uni.

Sadly free university is only free from the perspective of these lucky students in Scandinavia, as they may not be paying directly for their courses however the funding must definitely be coming from somewhere. Additionally understanding that these nation's overall taxation levels are actually quite high.

"the scandinavians are providing FREE tertiary education to their citizens"

I don't think you understand the concept of FREE. Perhaps you meant someone else is paying ?

Of course I understand that the Scandinavian tax-payers are paying for university education in Scandinavia, Trevor. I'm just angry that in Finland where I am living at the moment, free tertiary education is seen as a worthwhile investment in future tax-payers, while Australia as a much richer country can't see this. I'm angry that HECS/HELP fees are seen as the only option for funding universities in Australia when, as the statistics show, post-secondary education is almost compulsory to secure a job. To me, it feels like we would be compelled to personally pay for secondary or primary education, which also impart a personal benefit to the recipients.

That's true, but basic primary and secondary education should provide their students with relatively the same basic education and skills required to function in society to some degree (ie; numeracy/literacy).

Whereas tertiary is a personal choice and a sign of career direction.

If the funding was only provided from general taxation then effectively the poor would be subsidising the legal and medical courses of the richer students/families.

Why? do you think that the poor would not choose to do medicine, or law?

My understanding is that historically no.

Although I'm unsure of the reason for this. Culture?

Hi David,
As an ex-poor person I can partially answer that question based on personal experience. I wanted to study medicine but I didn't because:

1) I went to a state school in a poor area, where despite the fact that my average result was about 95% my TE score was only 945. My husband, who went to a wealthy private school, got a score of 985 despite having an average mark of about 80%. I hope the Gonski reforms fix this kind of inequity!

2) Medicine incurs the highest HECS fee, has the most expensive text books and has extremely long hours (no part-time job=no food because Austudy just didn't pay enough for text books + living expenses). When you're poor you do try to avoid having loans because you just don't have the cash-flow to deal with emergencies as well as loan repayments, so even though the HECS/HELP repayments are deferred it still feels sickening to have such a large debt.

3) Just going to uni is hard because your tradie friends laugh at your ongoing poverty and debt while they are earning money that you as a student can only dream of.

My first reason is the main reason poor people don't enter the high demand professional degrees IF they are considering going to university. Incurring a debt and not earning enough for many years to support yourself properly are some important reasons smart poor people don't even bother attending university. Only for some poor people is culture an impediment as most of my high school friends did dream at some time of being a high class lawyer or doctor.

So again I say, fund university places like they do in Finland. Provide adequate student allowances so that poor students can afford to live and buy the necessary things to study effectively. Then maybe, after time, universities might actually have student population demographics that reflect those of the general population.