Australian debt forgiveness schemes progress despite concerns

Victoria has tweaked its scheme to pay the university fees of nurses and midwives, amid doubts that such initiatives work.

Last August, Victorian premier Daniel Andrews announced that his government would make university “free” by covering the Higher Education Contribution Scheme (Hecs) fees of more than 10,000 new nursing and midwifery students.

“If you’re in year 12 and you’ve been thinking about studying nursing or midwifery, go for it,” he said. “We’ve got your Hecs fees covered.”

The scheme was part of a “massive hiring and upskilling initiative” aimed at “building an army of home-grown health workers to care for Victorians”. Recipients would attract A$3,000 (£1,600) a year for up to three years during their studies, and another A$7,500 if they worked in Victoria’s public health services for two years after graduating.

Victoria’s pledge reflected escalating interstate competition for health professionals amid worker shortages. “Every health system in the country is under enormous pressure due to the pandemic,” Mr Andrews said.

But his government has now revealed that the A$3,000 payments will not be restricted to Hecs. “These scholarships aim to reduce financial disincentives associated with [study] and are not designed to only support the university fee costs,” a document posted on the Business Victoria website explains. 

The change reflects a widespread view that living expenses while studying, rather than debt amassed through university fees, are the critical impediment for many students – particularly for courses with mandatory placements, which can force students to leave their part-time jobs and meet the costs of temporary relocation.

Policy expert Andrew Norton labelled the Victorian change a “good decision”. Professor Norton said in a blog last year that while such schemes were unlikely to entice more students into particular disciplines, they could reduce attrition and speed up completion if students had immediate access to the money. 

Education commentators have long harboured doubts that fee changes influence enrolments in countries with deferred loan schemes, like Australia.

While the federal government slashed fees for nursing degrees from almost A$7,000 to less than A$4,000 under the 2020 Job-ready Graduates reforms, there is little evidence of any effect on student numbers.

This did not deter the Western Australian government from employing a similar stratagem in its 11 May budget, which included a commitment to pay up to A$12,000 of the student debts of newly qualified nurses and midwives working in regional areas.

The scheme attracted criticism from the Australian College of Nursing. “I don’t want people…to do a nursing undergraduate qualification because they come out with less Hecs debt,” chief executive Kylie Ward told the ABC.

Calls for student debt forgiveness programmes are not limited to the human health professions. The Australian Veterinary Association wants the federal government to wipe the Hecs debts of vets who move to regional areas. 

National veterinary business Apiam Animal Health has reportedly taken matters into its own hands, promising to pay A$65,000 off the Hecs debts of young vets who work in rural areas for four years.

“We know student debt is a huge issue for most veterinary graduates,” managing director Chris Richards told The Australian. “We have some vets several years into their careers still burdened by huge student debts in excess of A$100,000.” 

Graduate debt is alarming many Australians, with outstanding balances expected to increase by 7.1 per cent overnight when indexation is applied on 1 June. 

But with a similar margin also applied to repayment thresholds from 1 July, graduates will not have to start repaying their student debts until their salaries reach A$51,550 – over A$3,000 more than now.

john.ross@timeshighereducation.com