Problems with cutting student debt

We are investing too much money in sending too many students to universities as it is, and this over-investment, while it is good for university administrators (of whom there are far too many) and staff, is bad for the country.

It will get worse if Education Minister Jason Clare has his way and his Universities Accord doubles tertiary enrolments.

Enabling more students to go to uni is not the answer

Just because you have an ATAR that allows you to attend a university doesn't mean you should.

When something is priced appropriately it helps us to make good decisions. But while students pay for their education as a percentage of their income, there is no price signal.

Rather than being income contingent, it would be much better if the loan were repaid on the basis of amortising it over a set term. This would probably vary, depending on the size of the loan.

While a basic arts degree can cost as little as $20,000 a medical degree is more like $90,000. You might repay the first in five years, but 10 years would be more appropriate for the second.

Feeling, as well as knowing, the real cost of a degree can change your judgment as to whether it is really necessary.

It might also encourage graduates to make more economically effective employment choices when they graduate. Being able to pay something off over the never-never can encourage a Lotus land approach to finances.

The government could still take the repayments out of pre-tax income via the tax system, which makes them tax free, and impossible to avoid.

Or potential students might decide not to go to university at all. There is a range of jobs that do not require a university education, and which people with a university education end-up doing because there aren't enough jobs for the degree qualified.

If universities were performing their traditional role of educating people about culture, that might not matter, but it does when increasingly universities seem to be credential mills and indoctrination factories. The students are not trained for the job they will actually get, but they are aliens in their own culture.

What will this do to inflation?

Then there is the question of inflation and house prices. Many young Australians say they can't afford to buy a house because of their student debt.