Time out for one baby ramps up debt, modelling shows, proving budget is 'sexist as well as being cruel and brutal', Greens say

Women who take time off work to have a baby face paying 30% more than their male counterparts in interest on their university student loans, according to new analysis of the Abbott government’s higher education changes.



The proposed overhaul – which faces an uncertain fate in the Senate – includes the removal of restrictions on the fees universities could charge students, decreasing the public funding for each course by an average of 20%, and increasing the interest charged via the Higher Education Loan Program (Help).

The Greens have released fresh modelling of the impact of the student loan scheme changes, focusing on how the interest amendments could affect women who take a year out of the workforce, and then spend two years working part-time, to have a baby.

Male nurses would take 33 years to pay off their debt, with an interest bill of $38,400 above the existing indexation arrangements, the Greens' calculations indicate. By comparison they say a female nurse who had a break to look after her child would take 39 years to pay off the debt and have an extra interest bill of $50,300.

The woman's interest would be about 31% higher than the man's, as a result of the longer time to take off the loan and compounding interest.

The calculation assumes nursing starting salaries of $48,000 based on the New South Wales award and salary progression to a cap of $77,000. The starting debt for a deregulated nursing degree is assumed to be $50,000, using indicative course fee figures provided last week by the Grattan Institute's Andrew Norton and published by Guardian Australia.

The Greens' spokeswoman on higher education, Lee Rhiannon, said the analysis showed the budget was "sexist as well as being cruel and brutal".

"The Abbott plan for higher education carries a heavy financial burden for women, which will push many women to reconsider their career and family choices," she said.

“Women who take time off work to have children will carry one of the largest financial burdens under the Coalition’s higher education plans."

The Greens have also compared men and women who complete a teaching degree under the new system and begin jobs on the NSW public service teaching salary.

The average man would take 19 years to pay off his debt and would have paid $16,800 in interest above the existing indexation arrangements, but a woman in the same circumstances who took a year off to have a baby and then worked part-time for two years would take 23 years to pay off the degree and face an interest bill of $23,000.

The Greens said this was a difference of $6,200 or 37%. If the woman had to pay Help for the six months of the Coalition's proposed parental leave scheme, the difference would reduce to $5,200, but she would still take 23 years to pay off the loan, the modelling indicates.

The government's hopes of securing passage of the legislation through the Senate were dealt a blow on Monday when the Palmer United party signalled its opposition.

A spokesman confirmed Clive Palmer’s opposition to the deregulation of university fees for domestic students and said he would “definitely” be voting against it. If his bloc of senators voted with Labor and the Greens against the changes, the legislation would not pass the Senate.

The cost of a university degree under the deregulated system is hard to predict because it will be up to the institution to set the amount for new students from January 2016, but experts acknowledge that the prestigious Group of Eight universities would be able to increase fees the most.

The government is planning to save $3.2bn over four years by indexing student debt under Help at the 10-year bond rate up to a cap of 6%, rather than inflation, and reducing the salary level at which students have to begin repaying. The Greens' modelling is based on a real interest rate of 3%, estimating the impact of a 6% indexation rate as compared with the current inflation-linked system.

The treasurer, Joe Hockey, defended the government's planned changes to higher education during an appearance on the ABC's Q&A program on Monday night.

He pointed to the fact the government was maintaining the Help system to ensure students did not have to pay a dollar of their tuition upfront and said university graduates on average obtained higher incomes.

Hockey said the government was establishing a scholarship fund to help disadvantaged students, with universities required to contribute $1 to the fund for every $5 they earned in higher fees under deregulation.