Financing the future
The Australian Higher Education Contribution Scheme (HECS) is a model that's been adopted worldwide. But it's an idea that has still greater potential.
First published in Advance, the Crawford School of Public Policy's magazine, on 1 December 2014. By PROFESSOR BRUCE CHAPMAN.
If you're below the age of 40 and reading this, there is at least a fair chance that the Higher Education Contribution Scheme (HECS) has, in some way, been a feature of your life.
You may have already paid it off, or be in the process of doing so, or perhaps you just feel like you've been saddled with it.
Whatever your feelings about it - and I say this as the person often blamed and/or credited with the design of HECS - I hope that you feel that the system has at least been fair to you.
If you've had money, you've had to pay it back. If times have been tight, then the amount you repay will be lower.
HECS was introduced in 1989 by the Australian Government. It is a process in which debts are collected through the tax system depending on the participant's income.
This arrangement is known as an income contingent loan (ICL).
ICLs differ critically from 'normal' loans in that repayments occur if and only when debtors' incomes reach a given level.
And if they don't ever reach this level, no payments are ever required.
In the years since its introduction, other countries have adopted similar student loan schemes.
There's even an ICL bill currently under bi-partisan consideration in the US Congress.