The verdict on university fees is in: it's checkmate for Christopher Pyne
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Version 0 of 1. Christopher Pyne is grumpy and irritable. The born to rule Tory is having a tantrum now that the senate will not let him deregulate the universities – something the Abbott government never got a mandate for. He claims students should “get some perspective” as the government is not “asking for their left kidney.” Well, here’s some perspective. If Pyne went to university under his deregulated system, he would be paying off HECS debts until the age of 64. This is not to mention how much harder a life would be to save for that ever more unaffordable house deposit and then somehow pay off that mortgage. And that’s before considering having children and the ballooning costs associated with raising them. What the minister is effectively asking those about to enter university is to indenture themselves into a life of debt. To rub salt in the wound, Pyne and Abbott never paid a cent for their degrees upfront. Fortunately, a group of mathematicians from the ANU’s Mathematical Sciences Institute built a model that could help Pyne understand why what he is asking of student is beyond the pale. Let me walk me through the variables. Pyne went to the University of Adelaide and studied law. The current cost for an international student who pays a deregulated price for a four year law degree is $31,500 annually. For domestic students at the currently deregulated non-Group of Eight Bond University, students pay $42,474 annually for three years. So let’s say Pyne would be charged the very conservative annual fee of $28,000 (we will give him the benefit of the doubt and say there is some price competition). Apply the current inflation rate (2.9%), use a 5% interest rate (a historical low for the government bond rate), zero years unemployed (Pyne was employed by senator Amanda Vanstone), pay him $48,000 starting salary, (the equivalent to what Vanstone paid), and give him 5% annual pay rises – well above the norm. The rate of repayment increases as a person’s salary increases, starting at $50,000 until the 8% cap is reached. At the age of 21, under his own plans, Pyne would have 43 years ahead of himself to pay off $202,734 of debt, $89,134 of which is just interest. In other words, only those who can afford to pay for their children upfront can spare their children from being saddled with a life time debt sentence. Pyne might dismiss this as “misinformation”, but mathematics don’t lie. The minister had the privilege of free education, but despises the idea of an educated enlightened society. And yet, he and many of his colleagues have benefited from the social contract that he wishes to dissolve. No one voted for that. |