policy & reform worst defaulters would be arrested at the airport on their return to New Zealand.
In the US, the average student debt in 2011 was US $ 26,600 and about 65 per cent of students receive financial aid. An incomebased repayment plan caps student loan payments at 15 per cent of post-tax income.
About 95 per cent of funding for student loans is supported by various government programs, either through direct lending or government guarantees. Interest rates vary between 3.4 per cent and 5 per cent a year and the national student loan debt exceeds US $ 1.2 trillion($ 1.3 trillion) – the second-highest consumer debt category outside home mortgages.
High US unemployment, higher college enrolment numbers, rising tuition fees, an increase in for-profit colleges and a rise in second degrees all contribute to the high US loan burden.
In the UK, average student debt for new graduates was estimated at £ 26,000 in 2012. At that time, there was £ 46 billion in outstanding student debt, with about 40 per cent of loans doubtful.
Most student loans are financed through a governmentsupported non-profit, the Student Loans Company, and interest is set at CPI levels or lower.
Tuition fees are capped at £ 9000($ 16,136) a year, and students can also elect to apply for a maintenance loan of about £ 3000 a year for living expenses.
Repayments occur under an income-contingent scheme. In 2012, students earning more than £ 27,734 started repayments, which occur over a fixed, five-year term. Unpaid loans are cancelled at the age of 65 or on the death of the student.
Last year, the UK government sold a portfolio of more than 300,000 student loans more than 15 years old – worth an estimated £ 890 million – to a private debt recovery firm for £ 160 million. This is the third time ageing UK student loans have been sold to private firms.
WHY SO MUCH DEBT DOUBT? Turning back to Australia, the HELP program is the successor of the Higher Education Contribution Scheme( HECS), a world-first, income-contingent student loan scheme introduced in 1989. HELP has been successful and now lends about $ 6 billion a year to tertiary students; those studying diplomas or degrees at private colleges or TAFEs will now be included in the scheme as well.
Blow-outs in the program have been attributed to both the removal of enrolment caps in 2012 and the introduction of VET- FEE-HELP for students doing vocational training through approved providers, which tripled the number of eligible students from about 20,000 in 2009 to about 70,000 in 2011.
However, VET-FEE-HELP is too recent to account for current doubtful debt; the reasons for the high ratio are more complex, and the biggest cause up until now has been graduates who earn less than the repayment threshold, Grattan’ s Norton says. The new, slightly lower threshold should help with this but it is unclear how much.
The Grattan report notes that large disciplines with lower repayment prospects are the main contributors to doubtful debt – commerce, education, nursing, science and humanities are the main contributors.
Women have made up the majority of higher education students in Australia since 1987 but are more than twice as likely to earn income below the HELP repayment threshold, mainly because they are more likely to work part time, Norton says.
Dr Jenny Chesters, an education sociologist at the University of Canberra, says HELP and HECS are intended to reduce disadvantage and allow more equitable access to tertiary education. In her view, the real cause of doubtful debt is not being addressed in reports that look at its recovery.
“ The real question is,‘ Why is someone who has done three or four years of university not earning enough to repay their student loan?’” � campusreview. com. au | 11