Preston Scheme Allowed to Let to None Students
24th Jun 2022
The debate around university tuition fees is both prominent and controversial even outside the UK. Whilst US democrats and republicans are at loggerheads over the proposed legislation to enable students to refinance their loans at lower interest rates, the debate also rages on in Australia as to whether or not the tuition fee system should be deregulated.
Under proposals released by Australian Prime Minister Tony Abbott's Liberal Party, universities would be allowed to set their own student fees, whilst government funding for university would reduce by 20%. The proposals would put increased pressure on students to repay loans earlier - loans that would also suffer from higher interest rates.
The radical changes, which are claimed will "strengthen the higher education system" are in response to increasing budgetary constrains to Australian public coffers following a rise in the deficit to a forecast 3.1% of GDP in 2012-13. Although Australia has one of the lowest levels of sovereign debt in the world, Mathias Cormann, Minister for Finance, supports the notion that the commodity-dependent economy is in fact reliant upon this prudent approach to debt as it underpins the nation's terms of trade.
During the financial crisis and subsequent recession that plagued most constituents of the global economy, a boom in mining sector investment (driven by China's insatiable demand for construction materials and energy) propped up Australia's GDP and enabled the coal and iron ore rich nation to side-step recession and the need for increased tax rates. However, with investment in Australia's mining sector now tapering off, the government has been forced to look for ways to trim back public spending.
However, critics would argue that given that Australia's net debt as a proportion of GDP is one of the lowest (c.20%) and is set to peak at around 32% (according to IMF figures), there is some slack in the coffers to allow for a less heavy-handed approach to spending on sensitive areas such as education and health.
What is clear is that debates around student tuition fees and loans are widespread and politically toxic, as politicians must tread an impossibly thin line between reigning in public spending and supporting financially-challenged students. As for the UK's students, the woes faced by their US and Australian peers serve well in putting the £9,000 fees in perspective.
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