Why Australia's HECS-HELP system is under pressure

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.”

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