University leaders have raised serious concerns that the Abbott government's higher education overhaul will saddle graduates with crippling levels of debt, deter mature-aged students from enrolling and involve big cuts to skilled disciplines.

A Guardian Australia survey of 17 university vice-chancellors has revealed that even those who have long supported deregulation of university fees are worried about key aspects of the planned higher education changes.

But some members of the prestigious Group of Eight – including the Australian National University, the University of Melbourne, the University of Queensland and the University of Western Australia – supported the direction of the government's changes.

Ten universities, including the University of Adelaide, which is part of the Group of Eight, raised concerns about students being burdened with higher levels of debt.

"My interest in these reforms was to see Australian students in the coming years have a much wider choice of the types of degrees, as found in the US – but without the US burden of crippling student debts," said the University of Adelaide vice-chancellor, Warren Bebbington, who had previously voiced support for fee deregulation.

"In fact, it is starting to look as if the student debt burden for many under the proposed reforms might well be worse than in the US. Deregulation would become mis-regulation."

The government faces a tough battle securing Senate approval for the changes, which include an average 20% reduction in the commonwealth contribution to university courses, deregulation of the fees universities can charge and changes to the Higher Education Loan Program (Help).

Interest will accumulate at the 10-year bond rate, capped at 6%, rather than the existing system of indexing the loan to the consumer price index. The changes to Help from June 2016 are estimated to save the government $3.2bn over four years.

Student debt to grow

Bebbington said Australia's proposal on student loans seemed "unduly harsh" compared with a British measure not to trigger higher interest until a student was in the workforce and had some capacity to repay.



The University of New South Wales – another group of eight member – welcomed the deregulation of fees but called on the government to continue to index student loans in line with inflation. It argued it was important that students perceived future loan repayments "as both equitable and manageable".

The vice-chancellor of the University of Technology, Sydney (UTS), Ross Milbourne, said the sector needed a "well designed" deregulation model.

"I don't support this budget package because it is a badly designed model of deregulation plus the biggest funding cuts in history to higher education," he said, warning the combination of measures could deter potential students.

The University of Western Sydney said a quarter of its students were from low socioeconomic status backgrounds, and more than 60% were the first in their family to attend university.

The vice-chancellor, Barney Glover, said the changes to student loan arrangements, combined with potentially large increases in fees, "may provide a further barrier or disincentive for students from lower socioeconomic backgrounds considering tertiary study".

Glover said it was flawed to allow the debt to compound before the student reached the $50,000 earning threshold and had the capacity to service the loan.

The University of Canberra, Charles Sturt University, the University of Southern Queensland, the University of New England, Swinburne University and Flinders University also raised concerns about student loans.

“I also think it is unethical for a generation of leaders who by and large benefited from free higher education to burden the generations behind them in this way,” said the University of Canberra's vice-chancellor, Stephen Parker.

The education minister, Christopher Pyne, said on Thursday his "fair and balanced" reforms were the biggest to the higher education system in 30 years and the government would consult with the sector on implementation.

Pyne said the government would offer more choices to students by uncapping commonwealth support for those undertaking diplomas, advanced diplomas and associate degrees, and those opting to attend non-university higher education providers. Student loans would still be provided with "the best terms on which most people will ever get a loan".

"No one will need to pay a dollar upfront. Graduates will only begin repaying their Help debt when they are earning more than $50,000. They will pay a fair interest rate with reasonable repayment thresholds as they repay their share of the cost of their higher education," Pyne said.

Fears for mature-aged students and parents

The vice-chancellor of Curtin University, Deborah Terry, said little attention had been paid to the fact that mature-aged students were likely to be particularly price-sensitive.



Such students may be engaged in their first tertiary study, or acquiring new skills in response to the changing labour market. More than a third of undergraduates at Curtin University entered as mature-aged students.

"At a time when many people are experiencing multiple careers across their lifetime, any impediments to mature aged students participating in higher education will not be in the national interest," Terry said.

"Indeed, given the pressures to ensure that the labour market adapts to an economy that will increasingly be dependent on knowledge-based industries, equity of access for students, irrespective of whether they are school leavers or mature aged learners, will be important."

The vice-chancellor of the University of Southern Queensland, Jan Thomas, also feared that the mature age market would be “particularly sensitive to increases in student contributions/fees, particularly in the context of changes to health, welfare and taxes”.

Thomas said she was concerned that charging interest would have consequences for students, "particularly if it doesn't recognise legitimate periods away from work, such as parenting leave".

The comment reinforces a Guardian Australia report on Tuesday illustrating how compound interest would significantly affect women who took time out of the workforce to have a baby.

The University of New England said it would be fairer to have the interest on the debt start accumulating after the completion of the degree and to stop accumulating during breaks in employment.

"For example, the disadvantage that this places on those who choose to temporarily leave the workforce in order to raise a family and to study could foreseeably result in an inequitable disincentive for participation in higher education on the basis of gender," said the vice-chancellor, Annabelle Duncan.

Where the cuts to public funding hit hardest

The acting vice-chancellor of the University of NSW, Iain Martin, criticised the extent of the reduction in the government contribution to the cost a degree. He said this would place a significant burden on students, simply replacing lost revenue rather than resulting in a better funded university system.



Martin said the large reduction in commonwealth support for programs such as engineering was "difficult to understand given the government's public support for the idea that our economic future will depend on high tech industries and a knowledge economy".

Bebbington, of the University of Adelaide, said disciplines such as the humanities and mathematics would have increased subsidies, while others, such as engineering and science, would have reduced subsidies.

"This would deliver effects that would be unfair to many students, and almost unworkable for universities," he said.

Milbourne, of UTS, said he could not understand the logic behind the distribution of the cuts: "The difficulty is that funding to science, engineering and some of the skill shortage areas has been substantially reduced, meaning fees will have to go up significantly, while government support won't be reduced in areas that are not skill shortage areas.”

The University of Sydney's vice-chancellor, Michael Spence, said he was concerned about the impact of the changes on low- and middle-income families and the disproportionate cuts to disciplines including engineering, environmental sciences, communications and science courses.

Uncertainty over fees

The likely fees facing new students as a result of deregulation are hard to predict, given universities will have the freedom to decide what to charge, but experts acknowledge the Group of Eight universities will be able to increase contributions the most as a result of their prestige.

Most universities contacted by Guardian Australia were unable to provide an estimate of likely fees from 2016, but many vice-chancellors said fees would have to rise simply to cover the reduction in public funding.

The University of Canberra said fees would rise at least 20% "as a starting point", while the Australian National University, UTS and Charles Sturt provided an estimate of about 30%.

The University of Western Sydney said in some cases the increase in fees would be minor, "but in the worst cases the additional cost to students could be over 90%".

The ANU's vice-chancellor, Ian Young, who is chairman of the Group of Eight, said claims of the cost of degrees rising to $200,000 were "alarmist".

Young strongly supported the government's reforms, saying it was a good outcome for the sector in a tight fiscal environment.

Young said the student loan system meant university education would continue to remain "free at the point of delivery", and he was pleased the government had adopted his call for a portion of revenue to be set aside for equity scholarships. Universities will be required to put 20% of additional revenue towards scholarships.

The University of Melbourne, the University of Queensland and the University of Western Australia were similarly enthusiastic about the direction of the government's changes.

The vice-chancellor of the University of Melbourne, Glyn Davis, said fee deregulation would give students more choice as to the kind of degree they wanted to study and what they were willing to pay.

The private Gold Coast institution Bond University said greater competition and diversity in higher education would deliver benefits for students. It said Bond students might now become eligible for the same Commonwealth Grant Scheme subsidies as their peers in public universities.

