I graduated later the same year with a small HECS debt – about $6000 for my entire degree.
Despite spending time overseas in my late 20s and early 30s, I paid off my HECS long before I had children.
As a new mother nine years ago, I naturally weighed up the financial equation of working and paying for childcare alongside other considerations, but HECS debt didn’t come into it.
Young women today aren’t so fortunate and the recently announced government plan to restructure university fees makes it worse.
While high university fees hurt both young men and women, there will also be an economic effect in reducing women’s workforce participation when they have children.
First, because the proposed increase in fees disproportionately affects courses dominated by women. Second, because of the way families make budgeting decisions about returning to work after parental leave.
The three areas of study the plan increases fees for are society and culture, creative arts, and management and commerce. The increases are for domestic students.
The fees have gone up the most for society and culture, a broad category that includes law, economics, politics, psychology, social work and traditional humanities subjects such as history.
The student contribution will rise from $6804 a year to $14,500 a year, with the government contributing just 4 per cent of the course cost. Department of Education figures show almost two out of three students enrolled in society and culture courses are women.
Creative arts includes performing arts, visual arts and design and my area of study, communication and media studies. In 2017 about three out of five students in these courses were women.
Finally, management and commerce includes accounting, finance and business degrees. This one is almost gender equal, with male students accounting for just over half of all students.
Of course, the planned cost of some degrees dominated by women is going down – nursing and teaching students will pay $3104 a year less, for example. But the discounts on some degrees are not as steep as the increases on others. Curtin University analysis shows female students paying more will be slugged an extra $5405 on average, while those paying less will save an average $2404. Male students are less affected either way.
It’s clear then that young women will bear the brunt of the increased fees.
Some people argue that it is a market signal to encourage young people to study other degrees that are deemed more useful for society or, more accurately, for employers.
That’s just silly. Prospective students won’t look at the cost of an arts degree and decide to study information technology instead.
The more likely outcome is that people will either be deterred from university altogether or they will do the degree they want and graduate with a huge debt.
This will have a disastrous effect on the participation of women in the workforce down the track, adding to other disincentives to work.
Australia already has a problem with women dropping out of the workforce when they have children. Of course, some people don’t think it is a problem because they believe a woman’s place is in the home.
However, the federal government officially has a strategy to boost women’s participation in the workforce, believing it could add billions to the economy. If they are serious about this, they should consider the effect of a high HECS debt.
In 2020-2021, graduates will start paying back HECS when they earn $46,620 a year, well under the median salary. There is a sliding scale, so someone just over the threshold pays 1 per cent of income towards the HECS debt, while someone earning above $136,740 forks out 10 per cent of their income, on top of other taxes.
Someone earning in the middle-income bracket from $37,001 to $90,000 pays a marginal tax rate of 32.5 cents in the dollar. But that income range spans 11 different rates of HECS repayment, from zero to 6 per cent. For roughly every extra $4000 in income, the graduate increases their compulsory HECS repayments by an additional 0.5 percentage points.
It is a huge burden on take-home pay, providing an additional disincentive to return to work or increase days.
Women already face barriers to work when they have children, both financial and practical.
Australian families have had free childcare during the pandemic but this will snap back to the old system later this month.
Many families do the sums and decide that the cost of childcare means the lower income earner is effectively either paying to work or barely coming out ahead. A typical solution is for the secondary income earner to work part time or not at all, ultimately harming their career and long-term financial security.
In Australia, where the male breadwinner model is prevalent, that’s usually the woman. Australian Bureau of Statistics figures from 2019 show just over one in four families with children under the age of 15 has both parents working full time and women are more likely to work part time than men.
A huge HECS debt will only exacerbate matters.
Caitlin Fitzsimmons is a senior writer covering social affairs with an economics edge.
Caitlin Fitzsimmons is a senior writer for The Sun-Herald, focusing on social affairs.