Students in class at The Australian National University. Photo by Stuart Hay.

Students in class at The Australian National University. Photo by Stuart Hay.

HECS scheme leading the world

A loans scheme invented at ANU is capturing worldwide attention, as Kate Prestt reports.

Countries around the globe are looking to Australia for a solution to growing problems with university student loans.

The Higher Education Contribution Scheme (HECS) opened up higher education to millions of Australians who might otherwise not have been able to afford it.

Variations of income-contingent loans are now in place in eight countries, with varying degrees of success.

The system’s inventor, Professor Bruce Chapman from the ANU Research School of Economics and Research School of Finance, Actuarial Students and Statistics, believes some of the schemes need tweaks.

He says there is no one-size-fits-all income-contingent loan scheme. “Many countries have student loan systems and face problems with default and great hardship,” he says.

“We’ve done enough statistical work on these countries to know with some confidence how to design an income-contingent loan scheme like HECS.

“The scheme would not only offer protection to the debtors but we think it will make the government revenue higher than it otherwise would.”