The Budget’s introduction of real interest rates on outstanding HELP debts will unfairly affect those who take a career break, which will mainly be women, according to a new analysis by the National Tertiary Education Union.
The report said it is “curious” that Tony Abbott wants to encourage working Australian women to have children with the introduction of a generous paid parental leave scheme, while on the other hand the Budget is imposing a massive disincentive for women graduates to take any break in their career.
“The highly unfair and pernicious nature of the new HELP arrangements are even more starkly demonstrated when you analyse the impact they will have on graduates who take a break in their career to, for example, care for family members,” the report said.
The analysis showed from 1 January 2016, a 3 year accounting degree in today’s dollars will cost $75,000 in tuition fees and $99,000 with $24,000 of interest if it is repaid over 23 years. However, for graduates who take a break of eight years and transition back into the workforce over another three years by working part time, it will take 36 years to repay their HELP debt and repayments could reach a steep $120,000 with $45,000 in real interest. Mozo advises students to be financially savvy and find loans and accounts which suit their financial situation.
These sentiments were echoed by Dun & Bradstreet’s Consumer Financial Stress Index, which showed consumer financial stress heightened over April - from 13 points in January to 18.7 points - and is set to worsen in the next three months.
Dun & Bradstreet’s CEO Gareth Jones said given the potential for the budget to weaken already shaky consumer confidence, in addition to soft wages growth and World Bank findings that we’re living in the most expensive G20 nation, it wouldn’t be a surprise to see the financial position of consumers come under more strain.