Author: Bruce Chapman, ANU

The federal budget’s announcements of wide-ranging changes to the youth allowance represent the most significant reforms to the system in 15 years, restoring fairness to a system that had strayed from its original purpose.

Many were surprised that the arrangements for this reform could be afforded when the Government seemed likely to postpone this kind of spending increase, given the present financial difficulties.

These changes are being financed essentially through the abolition of a substantial aspect of the allowance’s independent category. The result is increased fairness in a system established to allow greater access to higher education for poorer students.

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Author: Bruce Chapman

NB: This article is from the Harvard College Economics Review, Winter 2008, Vol II, Issue 1.

By all accounts there are emerging problems with US College loans. Increases in tuition over the last decade or so have been well above the rate of inflation, and in 2007 tuition levels stood at around $12,000 and $25,000 a year for public sector and private colleges, respectively.

US students taking out loans to pay tuition and to help survive may end up with very large debts, even of the order of more than $100,000. This has the unfortunate implication that for some graduates it is not feasible to take relatively low paid jobs because the size of their student loan repayments makes such employment hard to afford.

As reported by Mark Huffman in ConsumerAffairs.Com (March, 2007), ‘Why Does College Cost So Much?’, labor economist Ronald Ehrenberg shares that concern and thinks it might unduly influence a student’s choice of career. Huffman reports Ehrenberg as saying: “I am very much concerned and worried … that it may preclude students from entering socially important but low-paying occupations”.

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Authors: Bruce Chapman and Peter Drysdale

Making a higher education financing system work that seeks to recoup a significant part of the investment in higher education from individual beneficiaries requires the fiscal infrastructure to collect debts, through lending agencies or the tax system. A big question then is whether a country has these capacities for implementing and administering a student loan or higher education financing scheme. Countries need strong political support which is long term, enough bureaucratic capacity to ensure an effective administration and widespread public acknowledgement of the need for a higher education system and private contribution to its financing.

In this month’s EABER Newsletter Peter Drysdale and I argue that country specificity is important in the design, implementation and ultimately, the effectiveness, of higher education financing schemes. If Thailand were to implement a scheme similar to that in Australia or New Zealand, for example, it would be unlikely to generate either the same outcomes or the same level of debt repayment unless there were a raft of complementary reforms in the fiscal or social security system. One of the reasons for this might be that local incomes are not high enough in Thailand to allow for sufficient rates of repayment. But another critical reason has to do with the capacity to collect.

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Author: Bruce Chapman

My not so serious take on the 2020 Summit is in this quarter’s Agenda Magazine:

My guess is that 100 per cent of participants in the 2020 Summit, including myself, didn’t really know what to make of it beforehand. My guess is that 70 per cent of participants in the 2020 Summit, including myself, didn’t know what to make of it during the summit weekend. My guess is that a large minority of participants in the 2020 Summit, including myself, still don’t really know what to make of it.

Beforehand

When the summit was announced, the first issue concerned how best to get yourself invited. I knew that as a slightly post-middle-aged pink male I did not have the best demographics, so I would have to try some cunning tricks. Read the rest of this entry »