Australia's university sector is facing massive changes -- here's what you need to know

The University of New South Wales. Photo: UNSW

University fees will rise by nearly four times the inflation rate and graduates will have to start repaying their HECS debts once they earn a little more than the minimum wage as part of a raft of savings measures in the tertiary education planned for next week’s federal budget.

Education minister Simon Birmingham revealed the government’s plans on Monday night, but still faces a fight to have them approved in the senate.

Student fees will jump by an average of 8%, and the income level at which graduates have to start repaying their HECS bill will be cut by more than 20%, from $55,000 to earning $42,000 a year, just 20% above the minimum wage of $35,000. An additional 200,000 taxpayers are expected to face a HECS bill as a result.

Nurses and teaches now face an extra $1250 bill for their chosen career while lawyers will contribute an extra $3900.

The HECS repayment is level is 1% at $42,000, but other graduates will also find their repayments increased with the 7% repayment level cut by around 8% from $91,426 currently to $84,513.

Senator Birmingham says $52 billion is outstanding in student loans and around a quarter of that figure is unlikely to ever be repaid.

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

The minister called the changes “fair, measured and modest.”

Three years ago, under the then Coalition prime minister Tony Abbott and treasurer Joe Hockey, the government attempted to cut funding by 20% and deregulate fees, but the proposal failed to gain senate support.

The changes will cut the government’s contribution to the cost of a degree by 4% to 54%.

On top of the fee increases, the government will cut funding to universities by 2.5% as an “efficiency dividend” that will add $2.8 billion to the budget bottom line over four years.

The government also plans to link 7.5% of funding for universities to a range of performance benchmarks, including student satisfaction, completion and employment levels.

The goverment’s arguments for the savings and changes to the sector are based on a government-commissioned report by Deloitte Access Economics that looked at 17 universities over five years and concluded that costs grew by 9.5% while revenue jumped 15%.

As governments, including Labor under Kevin Rudd, continued to cut funding to the sector, universities increasingly looked internationally to generate additional income from overseas students.

The Deloitte report conceded that universities use the funds to cross-subsidise operations such as research and that the average profit margin for a university was 5.3% in 2015.

Universities argue that they spend $6 billion on research, with just $2.5 billion contributed by the federal government.

NOW WATCH: Briefing videos

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.