A couple of articles appeared on Stuff today, telling two different stories about the realities of living with and paying off a student loan.
The first, is a distressing read. The author describes how, as a 17 year-old, he embarked on an aviation degree and emerged with a qualification, $110,000 in debt and confronted by extremely poor job prospects. After volunteering for 18 months and a number of years in low-paid jobs, he left for Australia and while he is earning more, the interest accruing on his loan means he is further behind than he was when he finished his degree – his loan is now at $127,000.
The second, slightly more uplifting story, sets out the journey of a couple who successfully paid off their $120,000 combined student loans after years of working hard to do so. They also moved to Australia in order to escape working in “poorly paying jobs not related to our qualifications” and repay a loan probably larger than their parents’ first mortgage.
The comments on articles like this make for depressing reading – the balance of them blaming (with some venom) the pilot who began his studies as a naïve 17 year-old. They are a stunning display of self-righteous individualism lacking in empathy for another’s plight, attacking everything from this young man’s intelligence, mental competence, childhood upbringing, parental guidance and more. Yes, he borrowed the money. Yes, life is about living with our decisions and honouring our commitments. But surely we can have a more sophisticated discussion about the problem?
What is the problem?
Since the introduction of student loans 25 years ago, tertiary education has increasingly been seen (and heavily promoted) as an investment – something learners do in order to get a financial return through better jobs. Each year, learners have been asked to invest more. Each year, the taxpayer has been asked to invest more. Further, learners are increasingly being told they need to study for longer and complete postgraduate studies in order to be employable. That is, everyone – learners and the taxpayer – needs to invest yet more money. To say nothing of the opportunity cost of all that time. The question has to be asked: are any of us getting more for our investment? With a 2011 OECD report finding more than 40% of our workforce over-qualified, the answer is: for many people, probably not.
The cost of tertiary education is a product of the dominant structures (institutions, qualifications) and operating model (staffing, methods, funding formulae and monitoring). Arguments that we need to reconfigure the balance of who pays what (e.g. the government should pay for everything or that we should reduce the subsidy and students should pay more) do absolutely nothing to address the fundamental problem: we are getting the same product, at ever-increasing costs with ever-diminishing returns.
Nobody should have to pay for that.
How can we fix things?
The quickest way we can improve the return on investment is to reduce the cost of education but we can’t do that by keeping everything the same. We need a courageous re-think of the current system and institutional settings that guide how we do things. There is no blame to allocate for how things are – they were designed for another time and remain appropriate for some professions. But the problems are ours to fix.
We must insist that learners are provided with more choice about where, how and when we learn; that technology and collaboration between institutions is used to deliver significant cost-efficiencies; and that industry and institutions work more closely to create alternative (quicker, cheaper, more effective) learning pathways that learners can choose if it suits them.
Finally, if the stories on Stuff are anything to go by, each learner needs to receive honest advice from the institutions on the probable employment outcome of their studies and the likely loan repayment period. We require our commercial lenders to be more responsible and transparent in their lending practices – the same should be required of our learning institutions.
The Productivity Commission have announced an enquiry into new tertiary models. It might seem a bit dry, but there is always hope – participate and have your say.
We will have more to share on what we think could change in the next few days. We would love to hear your ideas too. Send them to us at email@example.com.