Director: Daniel C. Levy

Change in Student Loan Scheme: A Potential for Private Sector?

PROPHE Summary (by Hirosuke Honda):

Australian private higher education has expanded due to the Australian government's approval of a new scheme on student loan for students willing to pay full fees in both private and public institutions. Thirty-three privates have been approved and sixty more have been applying. Whereas private providers in the past mostly offered business and theological fields, the latter newcomers offer professional diplomas and certificates in health sciences and hospitality. As a result of the approved loan scheme, the number of students taking out loans via private higher education institutions has risen steadily, and the Australian Council for Private Education and Training expects a similar rapid increase in vocational education if the new scheme is extended to cover such a sector. However, government's report indicates that around one third of the loan will not be paid back. Furthermore, opponents are concerned about heavy burden of debts for students and graduates.

For the full story, see The Times Higher Education Supplement, October 7, 2005. "Private Colleges Get Loans" Boost by Geoff Maslen, Melbourne.

PROPHE Observation (by Prachayani Praphamontripong):

Student loan is a crucial public policy in higher education and is important for the private sector as a way for the government to help shoulder financial burdensome of the private sector and to provide access to more students willing to enroll in private higher education institutions. However, public funding for private sector is still uncommon, including in the Australian case where most private institutions do not hold university status but rather emphasize professional training and certificates. Whether or not public funding through a loan scheme for a private-non-university subsector would be worthwhile is debated. In addition, the new Australian loan scheme with interest free is tied to the country's tax system in which graduates would pay back the loan only if their incomes exceed a certain amount of money. Therefore, the government may never receive a payback through its loan from some students graduating from technical training institutions who will most likely become skilled technicians and workers with a minimum salary.