INTHEBLACK June 2026 - Magazine - Page 35
LISTEN
Australia’s HECS-HELP
system defers fees for tertiary
education, but rising costs and
policy changes have turned it
into a financial burden for many.
Reforms in 2020 reshaped
course pricing, leaving some
lower-earning graduates
with higher debts and raising
questions about fairness.
Inflation-driven indexation
and larger balances mean
HECS debt is now influencing
major life decisions, from home
ownership to career choice.
to this story
Australia's HECS scheme
promised a fair way to fund
universities without upfront fees.
Nearly 40 years on, surging
inflation and remodelled pricing
schedules have turned that
promise into a lingering financial
weight shaping how millions of
Australians live, work and plan
their futures.
Words Megan Breen
WHEN THE HIGHER EDUCATION
Contribution Scheme (HECS) was launched
in Australia in 1989, it marked the end
of 15 years of free university education and
intended to address increasing demand for
university places.
The initial system charged a flat annual fee
of A$1800 per year, deferred until graduates
earned A$22,000, with repayments starting
at 1 per cent of income and rising to 3 per cent
for incomes above A$35,000.
The rationale for asking graduates to
contribute to the cost of their education was
clear from the start, says Bruce Chapman AO,
emeritus professor of economics at
Australian National University and architect
of the original system.
“If universities were entirely free, most
taxpayers, who never go to university, would
be footing the bill for a relatively privileged
minority,” he says. “Graduates tend to do
well, so asking them to contribute is fair.”
But even early on, the assumption that
higher education would reliably lead
to steady, continuous earnings did not
match how people’s working lives unfolded.
Career breaks, part-time work and patchy
labour market participation mean the
repayment capacity looks very different from
person to person, even among graduates with
similar qualifications.
The result? For some, what was supposed
to be a fair, income-contingent system now
feels like a lifetime financial burden.
As Susan St John, economist and honorary
associate professor at the University of
Auckland, notes: “When you look at the
life course of many women who may spend
a decade out of the workforce and then
return part-time, it becomes clear they
may never fully repay their student debt.”
DEBT MINDSET
From the outset, the HECS system created
a guaranteed funding base that allowed the
university sector to expand two-and-a-half
to three times its original size and “made
higher education accessible, fair and
financially sustainable,” says Bruce Chapman.
Almost four decades later, things look
markedly different. HECS was formally
absorbed into the broader Higher Education
Loan Program (HELP) umbrella in 2005,
and average graduation debt sits at close
to A$27,600 as of 2025. Fees vary sharply
intheblack.cpaaustralia.com.au 35
