POLITICS
01/05/2017 7:49 PM AEST | Updated 02/05/2017 7:58 AM AEST

Education Minister Calls Changes To Higher Education Costs 'Modest'

He believes it is an "important" step in bringing the Budget into surplus.

The changes could see a possible maximum hike of $3600 for a four-year course.
Facebook/Simon Birmingham
The changes could see a possible maximum hike of $3600 for a four-year course.

Federal Minister for Education and Training Simon Birmingham has defended the government's announcement of changes to higher education costs made on Monday, saying the fee hikes to be faced by university students will be "modest".

Speaking on the ABC's 7.30, Birmingham said the changes come as part of the Turnbull government's "quite balanced" plan to bring the Federal Budget back into surplus.

In a speech on Monday Birmingham announced the government's budget package for higher education costs, which could see students forced to pay back their HECS debts when they start earning $42,000 a year, down from $52,000. In addition, the proposed legislation will see university fees increased from 2018 by 7.5 percent by 2021 -- a possible maximum hike of $3600 for a four-year course.

Universities will also be faced with funding cuts as part of the plan, which is designed to save the government $2.8 billion over the next four years.

"Across the economy we're working to make sure we bring the Budget into balance, while still growing jobs and opportunities for Australians," Birmingham told 7.30 host Leigh Sales.

"In relation to these higher education reforms, they are quite modest and quite balanced. We have worked very hard to ensure we come up with a proposal for students that sees them face a modest increase in fees.

"The Government will still pay the majority of a student's university fees, on average around 54% -- down just by a few percentage points on the historical arrangements. Students will face a small increase that on a weekly basis equates to about $17 for the highest level of fee increase that any students could possibly face."

In the announcement, Birmingham also confirmed that the changes will for the first time link university funding to successful student course completion rates, student satisfaction and employment outcomes, according to the Sydney Morning Herald.

When quizzed by Sales about whether the lowering of the HECS debt threshold was fair on students to a level only just higher than the national minimum wage, Birmingham said it was an "important" move aimed towards lowering the $52 billion of government debt associated with student loans.

"We have to make sure the [HECS] program is sustainable and we currently have about $52 billion of Government debt associated with student loans. On current estimates around one quarter of that will never be repaid," he said.

"We think it's important we get these debts paid back so we can maintain in the future the same type of generous student loans payment arrangement and fee arrangement that ensures that no student going to an Australian universities, regardless of their background, need pay $1 upfront.

"We want to maintain it as one of the most generous. We equally have to make sure it is affordable into the future. With a $52 billion loan bock at present and a quarter of that estimated not to be prepaid, we do need to make some fine tuning to it."

As part of the changes, which apply for all student loans and vocational courses, low-income university graduates will be forced to repay their debts earlier in their careers despite repayment rates being changed so that graduates need only pay 1 percent of their income after earning $42,000 a year.

It's a decision that Birmingham labelled as "fair, measured and modest" during his speech on Monday.

"At a repayment rate of just 1 per cent an employee will pay back just $8 per week of the student loan that funded the university degree," he said.

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