Budget 2017: University students set to face higher fees as part of Government shake-up

Updated

Students are set to face higher university fees from January next year as part of the Federal Government's overhaul of the higher education sector.

Key points: Under proposed changes, student fees will rise 7.5 per cent by 2021

HELP repayment income threshold to decrease from $55,000 to $42,000

Federal Government estimates changes will save $2.8 billion over four years

Education Minister Simon Birmingham on Monday night unveiled changes that he described as "measured, modest and balanced" ahead of next week's budget.

As part of the shake-up, student fees would increase by 1.8 per cent next year and continue rising to a total of 7.5 per cent by 2021.

The Government argues the changes would mean a price hike of between $2,000 and $3,600 for a four-year course.

The most expensive course, a six-year medical degree, would cost $75,000.

Senator Birmingham said the new policy was "quite measured, quite modest and quite balanced" and noted the Government was still paying the majority of students' fees.

"We're trying to maintain fairness and equity across this system," he told 7.30.

"Taxpayers will still pick up 54 per cent of average fee costs per student."

The plan also includes changes to the Government's Higher Education Loan Program.

HELP debt repayment income threshold lowered

From July next year students will have to start paying back their loans when they reach an income level of $42,000 per year, down from the current level of about $55,000.

Your browser can't display this. Find out more.

However, the repayment rate will be on a sliding scale from 1 per cent to 10 per cent depending on income.

The Government has abandoned a previously announced 20 per cent cut to university funding, but institutions will be hit with a 2.5 per cent efficiency dividend instead on Commonwealth Grant Scheme payments in 2018 and 2019.

The Government will also make elements of university funding contingent on performance in priority areas.

From January, 7.5 per cent of a university's funding from the Commonwealth Grant Scheme will be contingent on universities meeting requirements for admissions and financial transparency.

That will expand to include performance requirements for student retention and success from 2019.

Universities have been in limbo waiting for the Government to outline its plans for the sector, since it dumped the previous Abbott Government's policy of full-fee deregulation.

That proposal failed to win enough support in the Senate and 12 months ago the Minister started a fresh round of consultation canvassing a range of options for the sector.

The Government estimates the changes will save $2.8 billion over four years.

Topics: university-and-further-education, budget, government-and-politics, australia

First posted