Student Debt: Facts and Predictions

Last night I tweeted this image.

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It’s from the Greens’ website, What Will My Degree Cost? You type in some variables and it spits out a figure that’s supposed to be your predicted net debt if you want to go to uni under the radically different higher education model¬†proposed in this year’s federal budget. The above graphic was generated when I put in that I wanted to study medicine and hadn’t yet begun my degree.

As many people have pointed out: no, it’s not precisely accurate. That’s not because it’s ‘Labor-Green propaganda’ or because ‘Lefties are dumb’ or even because we don’t have mathematics degrees. It’s because there are no certainties upon which projections can be based. However, the makers of the website have discussed the underlying assumptions in their model here.

Fee deregulation literally means that universities can charge whatever they want for their courses. The VC of UTAS has recently said that, with the drop in federal funding, there will be a $30 million gap in the budget that will somehow need to be filled. The VC of the University of Melbourne recently said that course fees are likely to rise up to 61% – and that was only for ‘average’ courses like Arts and Science. Many others have said that course fees will almost certainly¬†rise significantly, including The Conversation, Gay Alcorn, Greg Jericho, and Ross Gittins.

Of course, until deregulation actually happens, we won’t know exactly what the course fees will be. It’s likely that some universities will charge higher fees than other universities. Higher fees may or may not reflect a more prestigious or higher quality course offering. We simply don’t know yet.

What we do know is what has happened in other countries. In the USA, an undergraduate degree at Harvard, an Ivy League school, will cost you $44,000 per year. A post-graduate law course (remember they will only let you study law if you already have a bachelor’s degree) will set you back $54,000 per year. The post-graduate MD course at Harvard will cost a similar $52,000 per year. This is likely what we’re heading for as we proceed towards deregulation and ‘free market’ ideologies that prioritise competition over fairness.

The tweet containing the image above has, at last count, been re-tweeted 355 times and been ‘favourited’ 94 times.

This has gotten me in a lot of trouble today as I became a punching bag for LNP die-hards and rabid tories. People accused me of being stupid, naive, of falling for ‘anything plonked in front of [me]’ and generally being gullible and unthinking. They said that it was ‘impossible’ that the figures in the above graphic could possibly be true, and that it was simply scare-mongering by the Greens and Labor. Basically: I’ve spent today being abused on the internet.

I don’t mind that. But it did get me thinking about what the actual mathematics involved are. It’s all speculation, as I mentioned above, but it would be useful to have some working shown rather than just an automatically-generated figure at the end of a web page.

So I decided to do some maths. Here’s what I came up with.

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This is what the first 36 years of your working life would look like if you completed a medical degree that cost you $40,000 per year and accrued interest at 6% per annum. It also assumes the new pay-back thresholds (between 4% and 8% of your yearly income). Based off this modelling, it would take you 61 years of work to pay back the debt, and by the time you’re debt-free, you will have paid a total of $1,584,000, most of which is simply the effect of compound interest.

The results are almost as dire if we use a model where the cost of a medical degree is $30,000 per year. It takes 36 years of work to pay back the debt and the total you will have paid by the end is $581,932.78.

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Again, while the degree cost is only $150,000 for five years, it’s the compound interest that really gets you.

The point of all this is to say: I’m not relying on shonky mathematics or Labor-Green propaganda to make my point. In fact, the original image I tweeted is a pretty conservative estimate.

I admit that you’d have to be pretty stupid to only be paying the minimum threshold repayments on a debt like this, especially on salaries of upwards of $150,000 per year. On the other hand, even if, upon getting a steady job, you begin paying off $10,000 or $15,000 per year (a pretty signifiant portion of your income at this stage), your debt level will still peak at at least $200,000. Even if you continue paying off significantly more than the 8% of yearly income required by the legislative scheme – say $20,000 to $30,000 per year – it still takes at least ten years, and probably more like twenty, to clear the debt. Remember that the ‘salary’ column is your pre-tax income; the actual amount you have to live on will be significantly less when you account for income tax on top of your HECS contribution. It’s also significantly harder to make extra contributions to pay off the debt when, for example, you’re financially supporting someone else (e.g. a partner; a parent; a family member who is sick or disabled), if you have children, or if you’ve been lucky enough to buy a house and need to also pay off your mortgage.

I have a post in the works about the merits (or otherwise) of various models of university funding and costs which will be much more in-depth. For now, I just wanted to stick it to all the people who been saying that the claims on the How Much Will My Degree Cost website are outrageous or absurd.

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Why I’m beginning to regret choosing UTas

With every day that goes by, UTas shows itself as an even more cynical and disillusioned institution. It seems utterly intent upon disenfranchising students and depriving them of the opportunity to obtain a good quality education.

Just today, we have had an announcement that nominations are open for the Student Representative Council, which included the information that elections are to be held from the 6th to the 8th of November. This is right in the middle of the exam period, a time when students are pulling all-nighters and skipping meals in order to ensure that the past thirteen weeks of their lives have not entirely gone to waste. A major problem in past SRC elections has been dismal voter turnout, a state of affairs which many of the candidates for the State Council positions (elected some weeks ago) actively campaigned to change. In addition to the (frankly outrageous) timing of the actual voting period, we have had the announcement that “all face to face campaigning is strictly prohibited from Monday 22 October, 2012, onwards.” This is, allegedly, an attempt to prevent students from being distracted from their exams.

UTas is actively trying to stop the people who will soon be our elected representatives from engaging with us. How can they hear our concerns if they are not allowed to speak to us? How are we to make an informed choice about the kind of people we want to have advocating for our interests if we are not allowed to hear them speak? And how on earth are we meant to understand their policy platforms when they are restricted to advertising their candidacy with posters no larger than A3 size, posted only on TUU noticeboards, after receiving the TUU stamp of approval?

The fact that SRC elections are a farce is only one element of UTas’ gross contempt towards students. Starting in 2013, the Faculty of Arts is undergoing a major restructure, allegedly designed to increase ‘efficiency’. This includes reducing the previous ten schools of discrete disciplines down to three schools, in which the old disciplines will be subsumed (without entirely losing their identities, of course). While there are obvious problems with amalgamating schools and depriving them of their individual identities, it was not immediately apparent how this would impact upon the teaching of the various disciplines, and I thought it might be justified if it really would reduce bureaucracy and administration costs.

However, it has now emerged that in addition to being stripped of their autonomy and identity, each of the original ten schools will be permitted to run only 14 different units of study in a given year. This is down from as many as 45 units per year in some schools. Education is not a one-size-fits-all arrangement. Students must be allowed to follow their passions, to explore new areas, to diversify their learning, and to specialise into particular fields. This restriction of units on offer deprives students of the choice we all deserve at this level of education, not to mention the fact that it significantly reduces the amount of work available for teaching staff. UTas has said time and again that it is trying to make itself more attractive to students in order to attract more people to study here. If that is the case then why are they actually reducing the number of opportunities that they provide to study and learn?

Currently before the Tasmanian Legislative Council is legislation which would reduce the number of student representatives on the University Council from two to one. The University is literally seeking to reduce the amount of input students are able to have into the way that their education is structured and run. I don’t know as much about it as I would like, but I know that UTas is also treating its academic staff with contempt. If we invest in our teachers and researchers, UTas could be a world-class university. Instead, staff are kept in the dark, with the threat of redundancy looming large, while their schools and faculties are restructured and downsized around them. A University is a place of learning, not a place to make money.

UTas is trying to silence the student voice, alienate us from one another, and reduce the quality of our education. There have been plenty of token gestures which purport to be listening to the student voice. Actions speak louder than internet surveys. Educational institutions should not be run like businesses. Have some respect for the intelligence and integrity of your students and your staff. We will not stand to be treated like this for much longer.

Information about the SRC elections can be accessed here.
Some information about the Arts Faculty restructure can be found here.

  • Things about me:

    My name is Mel, I'm a final year law student from Australia. I'm interested in politics, feminism, sociology and science, among other things. You can find my Twitter account below; I am more active there than here.

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