Some university graduates could be in their 50s before they repay student loans, an analysis of the Abbott Government's higher education changes reveals.
Universities Australia said it could take engineers up to 33 years to clear their HECS debt - longer than it takes to pay off their home. Under changes, universities will be able to set their own fees for degrees, Federal funding for courses will be cut 20 per cent, the income threshold for repayments lowered to $50,638 and student debts indexed to the 10-year Treasury bond rate, capped at 6 per cent, instead of the consumer price index. Universities Australia modelling on the impact of the changes on engineering and nursing students reveals their debts will at least double and take up to 15 years longer to repay.
Under the current system, an engineering graduate has a $37,319 debt after their four-year degree. Based on a $56,000 starting salary, rising to $90,000 after eight years full-time work, it will take them 14 years to pay off $46,701 in debt and interest.
Under changes, the same student faces making $94,372 in repayments over 20 years to be debt-free based on a 4 per cent interest rate and low fee rises.