A generation of higher education graduates will be saddled with student debt well into retirement if changes are not made to the way loans are indexed.
More than three million Australians have woken up to a student debt increase of 7.1 per cent.
Higher education loans are indexed in line with inflation on June 1 each year, but runaway price rises have caused balances to spiral and many graduates are tipped to be worse off than when they finished their studies.
Modelling conducted by the National Tertiary Education Union found loan increases may blow out repayment periods for some university degrees by more than four decades.
Business management graduates are likely to be the worst affected, owing nearly $120,000 over a repayment period of 44 years.
A humanities and social sciences honours degree could take 40 years to repay and cost $110,353.
The gender pay gap means female law graduates could take 36 years to pay off their qualification, four years longer than their male colleagues.
The union’s national president Alison Barnes said education was a fundamental right and should not lead to decades of financial burden.
Jane Body, 32, holds a bachelor of international relations and politics, a masters in business administration and a student debt of about $78,000.
If indexation continues to be tied to inflation, she’s worked out she will be paying off her student loan until at least the age of 65.
“Young people are quite often left out of economic discussion and policy making decisions (but) a lot of Australia’s policies are directly or indirectly age-based,” she told AAP.
“Many policies are in favour of older generations at the expense of the younger generations.”
Ms Body is the general manager of Think Forward which advocates for intergenerational fairness issues to be central in Australian politics.
“We are calling for a freeze on indexation so that at the very least we have time as a nation to have a conversation about how we can do this better,” she said.
Indexing student loans to wages growth rather than inflation could be a fairer system which would match the value of different degrees, she said.
The federal government is set to profit about $2.5 billion off the back of student loan indexation this year.
Greens senator Mehreen Faruqi pledged to continue advocating for action on the student debt crisis.
“Getting an education shouldn’t be a debt sentence,” she said.
“It’s clear this government has abandoned young people, who are on the front lines of the climate crisis, the housing crisis, the cost-of-living crisis and the student debt crisis.”
On Wednesday, Education Minister Jason Clare told parliament the Universities Accord, due to report in December, would consider education affordability.
He said HECS had made it possible for millions of Australians to get a university degree and change their lives through education.
But Ms Body said the benefits that came with having an educated population should not be at the expense of younger generation’s economic wellbeing.
“It’s not fair that this debt is almost solely being held by the younger generations,” she said.
© AAP 2023
