For three million Australians, the announcement of a reduction in indexation on their HECS and HELP student loan debt is welcome. The change means an estimated $3 billion will be wiped from student’s debt from July, because the amount is backdated to include the indexation added in 2023.
Also, proposed changes to the rate of indexation (similar to an interest rate) will not be based on inflation, but on more stable rates. The government is proposing it should be indexed using the Consumer Price Index or Wage Price Index, depending on which is lower on any given year.
The gender lens
Women are more likely to have a HECS or HELP debt. According to the 2022-23 Australian Tax Office data, women make up about 60 per cent of those who owe money. The average debt is $26,000, but women’s debts are larger because they owe 58 per cent of the overall debt.
The reason for this imbalance is complex, and will require a radical re-think of this outdated, sexist policy that unfairly impacts women.
How did we get here?
Between 1974 and 1989, higher education in Australia was free. In 1989, a student loan scheme was introduced as part of a push for a ‘user pays’ neoliberal system. Initially, all degrees cost the same, but then a tiered system was introduced at a later stage making some degrees more expensive.
In 1989, the policy was designed mainly by men. Women in parliament were still a novelty, and even when they were present, they struggled to have influence. So, these men were making policies based on their own male experiences, living in metropolitan settings, being paid high salaries, and they were often from wealthy families. Importantly, they were making decisions based on that specific time period.
Back then, less women went to universities. More women were married and part of nuclear or modern nuclear families, and there were less divorces. Women were expected to take long periods of time out of the workforce to care for children and do other unpaid work, such as other caring responsibilities within the family. Housing was more affordable, so having one family income was not as unusual as it is today.
There were less de-facto relationships, and overall, less relationship breakdowns. Additionally, same sex relationships and other family structures were not recognised.
But why does that matter?
When men created these policies, they were not thinking of women. Any indexation is more likely to hit women harder because women take longer to pay off their student loans. This is because statistically women:
- Take more career breaks to care for children and other members of their families,
- Are more likely to work part time, reducing their income and amount they repay,
- Earn less in feminised care industries,
- Earn less overall,
- Are more economically impacted during a relationship breakdown, and
- Struggle to work in regional, rural and remote locations due to the lack of services (e.g. early learning, disability care and aged care).
So, women’s debt is more likely to rise and fester for a long time. This has a profound impact on their mental health and contributes to household stress, especially during a cost of living crisis.
Additionally, many of the above issues means they have less superannuation, so their financial stability can be precarious. We know the fastest growing homeless group in Australia are women over the age of 55 years.
This type of policy is impacting women’s decisions to study, have babies, and stay in relationships even when they are abusive because they cannot afford to leave.
What now?
The government needs to be courageous and examine the implications of this policy on women and ask themselves, is this 1980s policy fit for purpose in modern Australia? If a policy is unfair for 51 per cent of Australians, is it the right policy?
If the government wants women to not only survive these policies, but thrive, what needs to change? The whole community is affected when we don’t co-design policies with the people they affect. In 1989, this was not understood by the men making the policies.
In 2024, can the government dare to think differently and bring a diverse range of women to the table to re-design the policy?