Fashionista ~ Career Woman ~ Op Shopper ~ Online Shopping Addict ~ Bargain Hunter ~ Child Rearer ~ Book Reader ~ Social Commentator

Thursday, May 15, 2014

Why Australia is not becoming America, and the HECS system still works

I am sick of reading alarmist media coverage and facebook statuses proclaiming that Australia is becoming America. The people making these comments probably have little understanding or appreciation of the “student debt crisis” in America, or the key differences between the US system and the Australian system post 2014 budget.
In this post, I am not attempting to offer an opinion on whether the government’s deregulation of university fees is positive or negative overall. This is a very complex question, there are many unknowns, and even the experts disagree. What I will tell you is why I don't think the 2014 budget means that Australia is becoming America, and why we won't have some sort of student debt crisis in the future.

The first thing to note is that regardless of how high the loan balance is, HECS loans are only repayable as a percentage of income that you actually receive. That means if you are unemployed or a low income earner, you don’t pay anything.

The student loan market in the US is complicated and there are various types of loans available. Many of these loans are repayable regardless of employment status and amount earned. This has created issues with rising unemployment levels during the GFC – people lose their jobs and then default on student loan repayments. 

The most flexible loans in the US (federal loans) allow deferral of repayments in some circumstances, but those circumstances are not as generous as under the HECS system. Under HECS, if you don’t earn, you don’t pay. If you do earn, you only pay a percentage of your income, and this percentage starts off small and only rises as you earn more. In 2009, 31% of US graduates reported paying over 12% of their income in education debt repayments (Source). Currently in Australia, the maximum you’ll ever pay is 8% of your income and you have to be earning over $80k to do that!

The second thing to note is that in America, private loans are often taken out by students to finance the gap between the cost of education and federal student loan limits. Most often, these loans are offered by private institutions (ie banks) and they are much more expensive and less flexible than federal loans. 

The closest analogy in an Australian context is taking out a personal loan or home loan with an Australian bank. With these loans, the bank is taking on the risk of the loan, and although they might offer limited hardship relief, it won’t be long before they’ll enforce the security underlying the loan (ie, repossess your house or car or your parent’s house or car if they guaranteed your loan) if you default. Repayments are fixed regardless of how much you earn or whether you have a job. Interest rates are generally variable, which is a risk factor because they could rise substantially depending on the economy. The banks look out for themselves – they are for-profit institutions.

The vast majority of Australians would never consider taking out a personal loan to pay for their accommodation during university, let alone their tuition fees. In America, this is much more commonplace. 

Finally, let me say that we don’t know exactly what will happen to university fees now that they will be deregulated. Currently, the average ratio of student loans to income is much higher in the US than it is here, and that might change. Personally, I think the statement in this article that “universities will increase tuition fees to international student fee levels, which are currently about three times higher. The Group of Eight universities will do that pretty quickly” may be an exaggeration. 

Even if it isn’t, my simplistic thoughts on the matter are:
  • If a degree costs 120k, people will be less likely to study one that is less likely to lead to a decent income and employment (I’m thinking an arts degree).
  • People might get some experience in the workforce and start studying later, which can be very positive (I personally wish I’d done this for various reasons).
  • If less people go to university, this would make it easier for graduates to find work. It might also over time push up salaries in careers requiring a degree.
  • More people will consider TAFE and apprenticeships (and the Government’s 2014 budget measures to encourage these options and make them more financially viable are to be applauded). I personally think that too many people go to university when they would be more suited to doing a trade or TAFE course. We have skill shortages in some trades, and graduates of certain degrees can’t find a job because of oversupply. This imbalance needs to be corrected.
I don’t like how HECS interest will rise to cover the Government’s cost of lending, but I suppose it does encourage people to pay off their loan faster. Ultimately it reduces the cost to the Government of providing these loans, and there is scope for the Government to reduce the interest charge if that’s feasible down the track (wishful thinking…)  Yes it sucks, but like ever rising taxes, I think that we’ll grumble and then move on.

If I have gotten anything wildly wrong, as always, please comment and correct me!

Monday, May 05, 2014

Current wishlist

The Elephant Duvet Cover By Valentina Ramos and matching sham set - $90US and $34US at Urban Outfitters

Deny Designs also stocks a much more extensive (and expensive) range of Valentina Ramos designs, even sheet sets. The sheet sets are 199 USD and queen duvet covers 249 USD:

Trelise Cooper If it aint Baroque Rug - $299 at Ezibuy

A Sunflower bloom umbrella, $38 at Peter's of Kensington. Sunflowers are one of my favourite flowers!

Colourful pompom rug - from Etsy or maybe I could make my own - the DIY ones aren't as pretty though!
Water Man Jug by Casa Uno - rrp around $95. The water would taste better, surely.

Saturday, May 03, 2014

It has been a while!

I haven't blogged for ages, and so have decided to do an 'update' post, as much as a momento for myself in the future as anything.


One thing I didn't blog about at the time was the break up with my now ex-boyfriend. We (or I) ended it in November of last year. Things had been not great for about 6 months, and I started getting frustrated at him and realising I didn't want to spend this minute, let alone the rest of my life with him. I also started noticing things about him that I really didn't like - I'm not sure whether I had turned a blind eye before because I was 'in love' or whether he was hiding his traits, probably a little of both.

We went on an overseas trip and on it, there were many instances where I realised how selfish he is. When he dumped all the bags on me and I was standing at the airport holding both mine and his, an image flashed through my head of 10 years down the track: I'd be holding all the bags, dealing with all of the kids running around me etc while he went off and did something like get a tax refund on his latest designer suit purchase. It wasn't what I wanted in a husband or the father of my children.

I realised several things the more I thought about it. Firstly, he was a very selfish and arrogant person and that wasn't going to change. Secondly, he brought out the worst in me. Thirdly, he was and always had been a lot more into the relationship than I had - I was swept up in it at one stage, but I don't think I ever loved him. I certainly had never said 'I love you' in the 18 months we'd been dating.

I was thinking about all of these things, and mulling over whether to end it or not, when I found out he was cheating. It made the decision very easy of course. The fact that he blamed me for his cheating was confirmation of what I already knew - he was selfish, and would not take responsibility for his own actions. Everything was always everyone else's fault.

I never thought I'd be a girl who was cheated on. When I had heard stories of cheating guys, I had always thought 'How couldn't she have known' or 'That would never happen to me'. It did happen to me, and it sucked... but that was 7 months ago now and I'm well and truly over him.

A few months after the break up, I started online dating. I've been doing it on and off ever since. It's tiring though - I don't like repeating myself over and over on emails to different guys, and then it's nerve wracking to meet them in person. So far I have been on dates with around 10 different guys. There was one guy who I was very interested in - we went on 7 dates over around 1.5 months, and then he suddenly ended it. Something changed at around date 5 and I couldn't figure out what at the time - I guess I'll never know what was going through his head or what was going on in his life. I was upset about that for a little while, but have moved on now. Of the other guys, I haven't wanted to see any of them again after the first date. I am very picky!


I have well and truly come to the conclusion that I don't like law, and don't want to be a lawyer. I'd like nothing more than to go back to uni and study primary school teaching. It would mean a pay cut, and a drop in 'status' but at least I'd (hopefully) enjoy my work.

I have been thinking about this option for over a year now, and it's looking more and more likely as time goes on and as I struggle to get through every work week. Surely there is more to life than doing a job you really don't like...

Part of me was hoping I'd meet the man of my dreams and have babies, then I'd be able to be a part time Mum and do part time legal work which would provide a decent income for me... but I haven't met anyone and who knows how long it could take.

I told my Mum that I wanted to go back to uni and study teaching. It didn't go down well. The whole family is intent on changing my mind - they think it's a terrible idea. They are also all 'high achiever's, and up until now, I have done everything they could have wanted - breezed through high school with top marks, breezed through law school with top marks, gotten good jobs etc.

It's a hard enough decision for me to make without family support, as my Mum and the rest of my family are very important to me. I keep putting off the teaching idea so as not to dissapoint everyone (I brought it up around a year ago and my Mum's reaction was even worse, she absolutely freaked out) but as time goes on and as I struggle to get through each work day, I am starting to care less and less about what she thinks. I think I'll soon be ready to take the plunge.


The 'other' category is not as exciting as I'd like! My life really just centers around work, getting through each work week, catching up with friends on weekends and then doing it all over again. 

I have put on weight (arrgh, yes more weight). I have been eating way too much chocolate and blaming it on hating my job and life etc. I have started trying to exercise - I now do boot camp twice per week which is fun and makes me feel good. The weight is sticking though, I'll actually have to cut out the junk food as well as exercising if I want to loose it. I think I gained another kilo over easter and am now at my heaviest EVER and am struggling to fit into my 'fat' clothes, so I really have to start doing something... I don't feel particularily motivated to though, which is worrying.

There is more in the 'other' category to come, so my next post can be based around that. My fingers are getting sore from typing now, this is such a long post!

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