[LINK] Aussie Hex a Fiscal Embarrassment Causing Brain Drain

[Kim Holburn]

The situation in the US is worse:

http://suicidegirls.com/interviews/2902/Cory-Doctorow-Homeland/

There's a lot of detail in the interview.  Doctorow calls it a ponzi scheme.

> The problem with that is that it’s become a Ponzi scheme, especially in America. We haven’t quite gotten there here. But in America, you have this crazy thing where it is somewhat true and it’s also universally received as true, that you can’t get a good job without a university degree. It’s also the case that universities, including many state colleges –– that are actually owned by the public –– can act as loan originators, which is to say they lend you the money but where those loans are then backed by the federal government. They can lend you any amount of money because there’s no risk to them because the government will take the loan off their hands. Those loans are then further secured by the federal government when they float them as bonds. So you have this weird perverse incentive where the universities, the more they charge the more they get –– which is a bit weird right? Because in real market economies, the more you charge the more you get up to a point, and then people start going, wait a second, that’s not worth it anymore, and they stop paying in. But if I tell you that you can’t get a job unless you get a degree, and then I tell you that no matter how much the degree costs I can get you a loan for that much, all of a sudden you start getting takers for those crazy propositions and that starts to look like a bubble, like a pyramid scheme. 
> 
> Then you get the bond traders who actually buy these loans and securitize them and turn them into bonds and float them around. Those people actually have it in their interest to keep tuition high and to keep the economy in such a state that indeed unless you have a degree you can’t get a good job, because that brings more people into the system who take out more loans. Those loans get bigger, that turns into more bonds, those bonds produce more coupons and those coupons continue to fund the private equity funds and whoever else is buying those bonds. And again, the federal government guarantees those bonds, and to the extent that the federal government is there guaranteeing the bonds, there’s a lot of money to be spent on lobbying the federal government to continue guaranteeing those bonds. 
> 
> Also, the federal government can be successfully lobbied to do what they’ve done now over the last 10 years, which is make student debt the only kind of debt you can’t be relieved from in bankruptcy, and the only kind of debt that can be taken out of social security. This is a perfect storm of awful, where in order to get any kind of a good job you have to take a loan out for a hyper inflated university degree and that loan is then visited upon you forever.



On 2013/Jan/21, at 2:06 PM, tomk wrote:

> One of my hobby horses is the ridiculous fees that are being charged our 
> students and the long term damage that is doing to our economy. It 
> appears others [the Grattan Institute] agree.
> I look forward to seeing some positive response from our Government to 
> fix the Brain Drain that this Hex repayment issue is causing.
> 
> Free Science, Engineering and Arts would be an excellent start. Leaving 
> only Law, Political Science, Business Studies, Economics and Medical as 
> the paid for Degrees.
> (We have too many lawyers and economists anyway...)
> 
> Quote:/ [From: 
> http://www.abc.net.au/news/2013-01-21/student-debt-climbs-to-record-26-billion/4473386]
> 
> Student debt climbs to record $26 billion
> 
> University students owe the Commonwealth a record amount of money, with 
> a new report estimating more than $6 billion worth of student loans are 
> never expected to be repaid.
> 
> The Grattan Institute report has found current and former students have 
> accumulated Higher Education Loan Program (HELP) debts of $26.3 billion, 
> up almost $10 billion since 2007.
> 
> The report estimates that of that figure, $6.2 billion is never expected 
> to be paid back.
> 
> The institute's Andrew Norton says many students are not expected to 
> earn the $49,000 a year required before HELP loans need to start being 
> repaid.
> 
> He says another reason is that students are earning more than $49,000 
> but have moved overseas.
> 
> "They're living overseas and the system doesn't catch them," he told ABC 
> News Breakfast.
> 
> "So that's why they are guessing, based on recent behaviour, that this a 
> long-term consequence of lending this much money."
> 
> He says the Federal Government should follow the lead of New Zealand and 
> England and attempt to recoup the money from Australian graduates who 
> work overseas.
> 
> "It is definitely worth investigating," he said.
> 
> "The Government has said it is problematic and difficult to try and get 
> people working overseas to pay their loans ... but if other countries 
> can do it I assume Australia can as well."
> 
> Mr Norton says the Government should also consider things like a loan 
> fee to try and recoup the money.
> 
> "They have a loan fee for full fee students in undergraduate colleges. I 
> can't see why only that small group should pay a loan fee and not 
> others," he said.
> 
> But he says the debt figures are not necessarily a negative thing.
> 
> "I think it's a symptom of success in the Australian system. The HECS 
> system was designed to expand access and that's what it's doing," he said.
> 
> "Participation has more than doubled since the scheme was set up just 
> over 20 years ago.
> 
> "Just the natural consequence of more students is the debt goes up.
> 
> "And also we're seeing a long-term increase in student satisfaction with 
> teaching.
> 
> "We don't know how that directly translates into learning more, but 
> there's a better learning environment than there used to be."
> /Quote
> 
> -- 
> If you make people think they’re thinking, they’ll love you; but if you really make them think, they’ll hate you.”– Don Marquis
> 
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-- 
Kim Holburn
IT Network & Security Consultant
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