With the mess that is the American higher education system, looking abroad to see how other countries treat college remains popular.
France is a frequent country of choice for its free education system, as are the Nordic countries. Slate proposed a new model last Thursday to add to the list: Australia. For student loans, Australia takes a different approach. Sort of.
“Australians borrow money from the government through the Higher Education Loan Program (or HELP—get it?) and related offshoots. When it comes time to repay the bill, the monthly amount has nothing to do with the sum borrowed. Instead, debtors earning more than AU$54,000 ($38,000) pay between 4 and 8 percent of their income, depending on how much they take home annually. Unemployment or illness? Salary falls under the minimum earnings required for repayment? No worries. Payments temporarily cease, with no interest or penalties accruing to the borrower,” Helaine Olen wrote.
Though more flexible, the program resembles the income-based repayment program in the United States. Monthly payments get reduced in come with a debtor’s income, and after repayment for 20-25 years, any outstanding debt is forgiven. For dropouts and graduates, it’s welcome relief from a heavy burden, but the federal government remains responsible for the outstanding debt, effectively shifting it to taxpayers.
Though not at American levels of student debt, Australia faces a similar problem.
“Australians are increasingly worried about the amount of student-related debt, which is growing rapidly. (One estimate has it surging from AU$50.3 billion this year to AU$70.4 billion in 2018.) That means students will owe more money, likely paying it off over a longer period of time. There is also concern over what those down under like to call ‘doubtful’ debt—estimates are that 20 percent of students will never be flush enough to repay their loans, leaving taxpayers on the hook.”
Regardless, the repayment plans remain popular.
Like the United States, higher education costs have climbed in Australia.
The Australian government used to provide the vast majority of funds for universities, but began cutting its contribution in the 1980s. “today the government contributes only around half the investment in teaching and research across the sector,” The Conversation noted.
For total costs, “Universities receive money from government for each student they [enroll], as well as funding from the student through the HECS-HELP loan scheme. Of this combined per place funding, students contribute between 29% and 84% of the total.”
That proportional decrease, however, doesn’t mean that government spending has slowed. Between 2007-2008 and 2010-2011, Australia has increased education spending 68 percent. If the United States wants to improve on keeping costs low, Australia might not be the best model.
That isn’t to say that the American system is perfect. Australia has received positive attention for improving graduation rates for first-time students from low-income families, something with which the American system has struggled. They’ve also moved to address unpaid student debt from graduates who move overseas and avoid paying down their loans.
To lower college costs, Australia offers fewer examples. Relieving students of debt requires a different approach than making college more affordable.