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Contents > 2. Teaching and Learning > 2.2 Student fees, contributions and loans
2.2 Student fees, contributions and loans
Higher Education Contribution Scheme
Since 1989, Australian students in a Commonwealth-funded higher education place have generally been required to contribute to the cost of their education through the Higher Education Contribution Scheme (HECS). The main exceptions are students with an Australian Postgraduate Award, students who have been granted a HECS-exempt place under a research scheme, students in an enabling course and students with a Merit Based Equity Scholarship.
A key equity feature of HECS is that payment arrangements are based on the individual’s capacity to pay. This arrangement means that students are not prevented from participating in higher education by an inability to pay up-front. Students are able to defer their contribution. They are then not required to make payments until their personal income in a financial year exceeds the minimum threshold, which is $23 242 for the 2001–2002 financial year. The level of payment required above this threshold depends on the person’s income. Table 2.5 shows the income thresholds and repayment rates for the 2001–2002 income year.
At the March 2001 (semester 1) census date, there were 614 100 domestic students studying at Commonwealth-funded higher education institutions. During 2001 a total of 694 000 students studied at these institutions (this includes semester 1 and semester 2 enrolments), of whom 546 500 (79%) were HECS-liable.
At the March 2001 (semester 1) census date, 485 500 domestic undergraduate students were studying at Commonwealth-funded higher education institutions. During 2001 a total of 521 100 domestic undergraduate students studied at these institutions (this includes semester 1 and semester 2 enrolments), of whom 506 100 (97%) were HECS-liable.
Table 2.5 HECS income thresholds and repayment rates, 2001–2002
|
For HECS repayment |
Rate (%) to be applied |
|
Below $23 242 |
nil |
|
$23 242 – $24 510 |
3.0 |
|
$24 511 – $26 412 |
3.5 |
|
$26 413 – $30 638 |
4.0 |
|
$30 639 – $36 977 |
4.5 |
|
$36 978 – $38 921 |
5.0 |
|
$38 922 – $41 837 |
5.5 |
|
$41 838 and above |
6.0 |
Source: Department of Education, Science and Training and Australian Taxation Office, 2001.
HECS contributions
Table 2.6 shows actual HECS liabilities, payments and accumulated debt for 1989–1990 to 1999–2000 and projections for 2000–2001 to 2004–2005. Students who choose to pay their contribution up-front in full, or who make a partial up-front payment of $500 or more, receive a 25 per cent discount on the amount paid. Some students are required to pay up-front without a discount. These students include some New Zealand citizens and Australian permanent residents. Just over one-fifth of HECS-liable students paid their HECS contribution up-front in 2001 while the remainder deferred their payment.
Table 2.6: HECS liabilities, payments and accumulated debt, 1989–1990 to 2004–2005
|
Year |
Students’ |
Up-front |
Voluntary |
Repayments |
Accumulated |
|
1989–1990 |
527 |
82 |
2 |
9 |
na |
|
1990–1991 |
604 |
91 |
6 |
28 |
na |
|
1991–1992 |
763 |
125 |
12 |
49 |
1 749 |
|
1992–1993 |
808 |
135 |
11 |
57 |
2 321 |
|
1993–1994 |
825 |
131 |
19 |
73 |
2 932 |
|
1994–1995 |
888 |
157 |
17 |
304 |
3 354 |
|
1995–1996 |
920 |
176 |
32 |
219 |
3 958 |
|
1996–1997 |
1 099 |
208 |
58 |
264 |
4 504 |
|
1997–1998 |
1 302 |
226 |
67 |
472 |
4 922 |
|
1998–1999 |
1 454 |
248 |
73 |
497 |
5 526 |
|
1999–2000 |
1 593 |
270 |
80 |
532 |
6 229 |
|
2000–2001(a) |
1 690 |
278 |
98 |
565 |
7 184 |
|
2001–2002(a) |
1 763 |
283 |
111 |
601 |
8 221 |
|
2002–2003(a) |
1 824 |
293 |
122 |
645 |
9 297 |
|
2003–2004(a) |
1 875 |
302 |
134 |
705 |
10 365 |
|
2004–2005(a) |
1 919 |
310 |
147 |
774 |
11 411 |
(a)
estimates.
Source: Department of Education, Science and Training; Australian
Taxation Office.
When HECS was introduced in 1989 all students were charged a flat rate irrespective of their course of study. In January 1997, a three-tiered system of charges was introduced to reflect the differing cost structure of various courses and the differing potential earning capacity of graduates. The HECS contribution levels for 2002 are:
-
$3598 per annum: arts and humanities; justice, legal studies; social science and behavioural science; visual and performing arts; education; and nursing.
-
$5125 per annum: mathematics and computing; other health sciences; agriculture and renewable resources; built environment and architecture; science; engineering and processing; and administration, business and economics courses.
-
$5999 per annum: law; medicine and medical science; dentistry and dental services; and veterinary science.
The HECS liability incurred by students in a year includes a substantial amount of Commonwealth subsidy associated with HECS arrangements. This subsidy comprises a 25 per cent discount for up-front payments, a 15 per cent bonus on voluntary repayments, debt write downs due to death, remission of HECS debts due to special circumstances, and the provision for doubtful debt. Taking the full Commonwealth subsidy into account, the actual student contribution, on average, represents around 24 per cent of the course cost.
A student’s HECS liability is determined on the census date. Students who withdraw before this date are not required to pay HECS. Students who withdraw after the census date because of special circumstances may apply to have their HECS debt for the semester reduced or removed. If they are not satisfied with the initial decision, they can apply for a review by the Department. If they are dissatisfied with the review decision, they may apply to the Administrative Appeals Tribunal (AAT). If new information is provided to the AAT that was not available to the Department when it reviewed its decision, the Department may reconsider its decision. Table 2.7 shows the number of cases finalised in 2000–2001.
Table 2.7: HECS remission cases finalised, 2000–2001
|
Initial |
Review by |
Departmental |
AAT |
|
|
Remitted |
1419 |
99 |
9 |
1 |
|
Not Remitted |
1020 |
118 |
3 |
6 |
|
Cases not eligible |
670 |
25 |
0 |
18 |
|
Number Finalised |
3109 |
242 |
12 |
25 |
The Higher Education (HECS) Special Account
HECS revenue is returned to the higher education system via the Higher Education (HECS) Special Account. The Commonwealth contributes the difference between the repayments received and the total HECS payments required to be made to the sector (the latter being total HECS liability minus up-front payments). Figure 2.1 shows repayments of HECS debts and the Commonwealth contribution as a percentage of all payments made from the Higher Education (HECS) Special Account. For 2000–2001, total student repayments are expected to be $663 million. This comprises $98 million in voluntary repayments and an estimated $565 million repaid via the taxation system. These repayments represent 47 per cent of the total HECS payments required to be made to the sector. The balance of the payments required to be made were funded from a Commonwealth contribution of $748 million.
Figure 2.1: repayments and Commonwealth contribution as a percentage of the Higher Education (HECS) Special Account, 1990-1991 to 2003-2004(a)
Source: DEST HECS data
(a) Repayments before
1994-1995 do not include PAYE tax instalment deductions collected in
repayment of HECS debt.
The accumulated HECS debt at 30 June 2002 is estimated to be $8.2 billion. The accumulated HECS debt will continue to grow until students’ repayments exceed students’ HECS loans.
Fee-paying domestic undergraduate and postgraduate students
Universities must provide a target number of Commonwealth fully funded places. They cannot charge fees for these places or for HECS-exempt postgraduate research places. Otherwise universities are able to make their own decisions about which courses are HECS-liable and which attract fees. Universities determine their own fee levels for domestic students taking into account costs and demand.
Domestic undergraduate students may be HECS-liable or HECS-exempt. The vast majority are HECS-liable (around 97 per cent). Since 1998, universities have been able to charge domestic students up-front fees for undergraduate courses, provided that the number of domestic students charged fees for a particular course does not exceed 25 per cent of the total number of places available for domestic students in that course. Eighteen universities are offering around 4100 undergraduate fee-paying places for domestic students in 2001 under this policy.
Domestic postgraduate research students usually have a HECS exempt place provided under the Research Training Scheme (RTS) but otherwise may pay fees. HECS-liable higher degree research places are currently being phased out.
Domestic postgraduate coursework students may be HECS-liable or pay fees. Since 1994, universities have been able to charge up-front fees for domestic postgraduate students who are not in HECS-liable places. Courses leading to an initial qualification in nursing or teaching or provisional registration as a medical practitioner must be offered on a HECS-liable basis. The balance of funding between HECS-liable and fee-paying places has changed over time (see table 2.8).
Table 2.8: Proportion of HECS-liable to fee-paying students postgraduate coursework places, 1996 to 2000
|
|
1996 |
1997 |
1998 |
1999 |
2000 |
|
HECS-liable places |
69.4 |
63.5 |
52.5 |
42.5 |
37.5 |
|
Fee-paying places |
30.6 |
36.5 |
47.5 |
57.6 |
62.5 |
Table 2.9 shows the fee-paying status of domestic student places by level and fee-paying basis. In 2001, there were around 7000 domestic places at the undergraduate level funded on a fee-paying basis. This includes employer-funded and non-award places and special courses offered by Marcus Oldham College, Australian Maritime College and Avondale College. In 2001 there were 4100 domestic fee-paying undergraduate places under the policy introduced in January 1998, enabling universities to charge domestic students upfront fees for undergraduate courses. This is an increase of 54 per cent from 2000. There has also been an increase in the number of domestic fee-paying postgraduate places, which now number 28 700. The figure for domestic fee-paying postgraduate places includes 300 places from institutions that did not receive Commonwealth-funded places under the Higher Education Funding Act in 2001.
Table 2.9: Domestic fee-paying student places(a) by course level, 2000 and 2001
|
Fee-paying basis |
Undergraduate |
Postgraduate |
Other |
Enabling, |
Total |
|||||
|
2000 |
2001 |
2000 |
2001 |
2000 |
2001 |
2000 |
2001 |
2000 |
2001 |
|
|
Undergraduate |
2 647 |
4 079 |
0 |
0 |
0 |
0 |
1 |
6 |
2 648 |
4 085(b) |
|
Postgraduate(c) |
0 |
0 |
167 |
353 |
24 501 |
27 944 |
288 |
369 |
24 956 |
28 666 |
|
Non-award course |
0 |
1 |
0 |
0 |
0 |
0 |
2 884 |
3 223 |
2 884 |
3 224 |
|
Employer funded |
2 072 |
1 732 |
11 |
9 |
600 |
702 |
7 |
50 |
2 690 |
2 493 |
|
Remedial/fast tracking |
202 |
372 |
0 |
0 |
2 |
0 |
13 |
14 |
217 |
386 |
| High degree research students who have exceeded maximum limit |
0 |
0 |
470 |
584 |
0 |
0 |
0 |
0 |
470 |
|
| Higher degree students where tuition fee fully waived |
n/a |
0 |
n/a |
685 |
n/a |
1 |
n/a |
2 |
n/a |
|
|
Special courses (d) |
817 |
709 |
0 |
1 |
33 |
36 |
0 |
3 |
850 |
749 |
|
Total |
5 738 |
6 893 |
648 |
1 623 |
25 136 |
28 683 |
3 193 |
3 667 |
34 715 |
40 875 |
n/a = not applicable.
(a) A place is one equivalent full-time student unit (EFTSU). This table does not include fee-paying students at the University of Notre Dame.
(b) This total represents the number of undergraduate fee-paying places that are provided by universities under the guidelines issued under section 13(1) of the Higher Education Funding Act 1988. The conditions for providing these places include the requirement that students who may be charged fees for a particular undergraduate course do not exceed 25 per cent of total places in that course.
(c) Includes 300 places from the Australian Film, Television and Radio School, Avondale College; Melbourne College of Divinity; Bond University and the Australian Defence Force Academy in 2001. These 300 places are not included in table 1.12.
(d) Special courses provided by Marcus Oldham College, Australian Maritime College and Avondale College.
Source: Higher Education Statistics Collection.
Postgraduate Education Loans Scheme
The Government announced the Postgraduate Education Loans Scheme (PELS) as part of Backing Australia’s Ability in January 2001. Legislation to establish PELS was passed on 30 August 2001 and received Royal Assent on 18 September 2001. PELS will provide an interest-free loan with deferred repayment arrangements similar to those for the Higher Education Contribution Scheme (HECS). The scheme is designed to encourage and support people wishing to undertake postgraduate non-research courses as a means of upgrading or acquiring new skills.
From January 2002 both continuing and commencing students enrolling in such courses are able to borrow up to the limit of the tuition fee set by the university for each semester for the duration of their course. The loan does not cover accommodation or other living costs. Australian citizens, and some Australian permanent residents undertaking postgraduate non-research courses at publicly funded universities are eligible for PELS.
The conditions of the loan are similar to those that apply to HECS loans. Debts incurred under PELS are added to any existing HECS debt a person holds and the combined amount is repaid as one debt. As with HECS, this means people will begin repaying their loan when their income reaches the minimum threshold for compulsory repayment, which in the 2001–2002 income year is $23 242.
The loans provided under this scheme are expected to amount to some $995 million over the next five years.
Open Learning Deferred Payment Scheme
Since 1994, the Open Learning Deferred Payment Scheme (OLDPS) has enabled Australian students undertaking full time undergraduate level units of study through Open Learning Australia (OLA) to defer payment of part of the fee charged by OLA by taking out a loan from the Commonwealth Government.
To be eligible for OLDPS, a student must be registered with OLA and be undertaking at least two undergraduate units per study period which could be accredited towards an undergraduate course of study undertaken through a higher education institution.
Since January 1997 OLA has set its own tuition fees. The full amount charged by OLA for a unit of study for the March, June, September and December 2002 study periods is $430. OLDPS allows the deferred payment of the government set ‘basic charge’ for a unit of study, which in 2002 is $359 per unit. Therefore students are required to pay a balance of $71 per unit directly to OLA.
OLDPS debts are combined with any existing HECS or PELS debts to form a single debt. As with HECS and PELS, this means people begin repaying their loan when their income reaches the minimum threshold level for compulsory repayments, which in the 2001–2002 income year is $23 242.
In 2001, 2468 students deferred part of their OLA tuition fees using OLDPS and 5767 students paid their OLA tuition fees up front (table 2.10). Table 2.11 shows the fees charged by OLA including students who defer using OLDPS.
Table 2.10: OLA students and places, 1994 to 2001
|
Year |
Students |
Places |
Deferred payment, |
Upfront payment |
|
1994 |
2 719 |
5 851 |
1 319 |
1 134 |
|
1995 |
3 313 |
5 417 |
1 517 |
1 158 |
|
1996 |
3 218 |
5 343 |
1 485 |
1 241 |
|
1997 |
2 047 |
5 873 |
774 |
1 062 |
|
1998 |
1 868 |
6 173 |
715 |
999 |
|
1999 |
1 926 |
4 674 |
738 |
1 076 |
|
2000 |
2 029 |
4 939 |
778 |
1 188 |
|
2001 |
2 468 |
5 767 |
979 |
1 441 |
Source: Higher Education Statistics Collection.
Table 2.11: Total fees charged by OLA and fees deferred under OLDPS, 1994 to 2001
|
Year |
Amount of fees |
Total fees |
Total fees for |
Total fees for |
|
1994 |
3 219 275 |
3 219 275 |
2 761 735 |
5 981 010 |
|
1995 |
3 753 195 |
3 753 195 |
n/a(a) |
– |
|
1996 |
3 811 442 |
3 811 442 |
3 194 272 |
7 005 714 |
|
1997 |
2 045 126 |
2 045 126 |
3 652 210 |
5 697 336 |
|
1998 |
1 922 261 |
1 922 261 |
3 515 922 |
5 438 183 |
|
1999 |
2 012 447 |
2 507 593 |
3 201 950 |
5 709 543 |
|
2000 |
2 154 760 |
2 645 230 |
3 720 698 |
6 365 928 |
|
2001 |
2 750 764 |
3 328 235 |
4 489 093 |
7 817 328 |
(a)
Not available. Data not supplied.
Source: Higher Education Statistics Collection 2001.
Students who withdraw after the census dates of 31 March in first semester and 31 August in second semester may apply to have their OLDPS debt for the study period reduced or removed because of special circumstances. Departmental review and Administrative Appeals Tribunal (AAT) procedures apply if a student is dissatisfied with the initial decision. Table 2.12 shows the number of OLDPS remission cases in 2000–2001.
Table 2.12: OLDPS remission cases finalised, 2000–2001
|
Initial |
Review by |
Departmental |
AAT appeal |
|
|
Remitted |
9 |
1 |
0 |
0 |
|
Not remitted |
17 |
1 |
0 |
0 |
|
Cases not eligible |
||||
|
for decision |
14 |
0 |
0 |
0 |
|
Number finalised |
40 |
2 |
0 |
0 |
Under the Commonwealth Agreement with OLA, the Government provides financial assistance to OLA for administration costs relating to OLDPS under section 22A of the Higher Education Funding Act 1988. There was $230 000 allocated for the administration costs of OLDPS in 2001.