ANU takes HECS system to South America

4 July 2019

Researchers from The Australian National University (ANU) will head to Brazil next month to support governments in South and Central America looking to implement income contingent loans for students, similar to Australia's HECS system.

HECS is an interest free loan scheme that allows students to attend university without paying up front fees. Students only have to repay their debts when they have sufficient income to do so.

Professor Bruce Chapman of the ANU College of Business and Economics, who was one of the original of architects of HECS, has been instrumental in exporting the system internationally.

"Income contingent loan systems are now policy in about eight different countries and in three or four years there are likely to be another four," Professor Chapman said.

"There are at least 20 million people who have now been able to take on income contingent loans, as opposed to normal time based loans.

"HECS in Australia, and systems of this type internationally, have been associated with the substantial expansion of higher education systems and the development of skills.

"Higher education funding reforms like this facilitate the expansion of higher education, and mean more students have the ability to take up higher education regardless of their financial circumstances."

Income contingent loan systems for education now operate in countries such as New Zealand, England, Hungary, Japan, South Korea and the United States.

Dr Timothy Higgins, who will also be making the trip, said HECS-style systems have improved the lives of millions of people around the world.

"It means you have very large numbers of people who have not faced repayment difficulties," Dr Higgins said.

"Many student loan systems require people to pay back a loan independently of their capacity to do so.

"This means that unemployed young graduates, or graduates who step away from full-time work to raise a family, can struggle to repay and face loan default, with damage to their credit reputation and future capacity to borrow."

Professor Chapman said the researchers will attend a conference on the topic as well as a number of meetings with foreign government representatives.

"We hope to achieve more collaboration with South American policy makers and share our knowledge and experiences from Australia in our design of the HECS system," he said.

"The lessons that we have learned over the years can help them develop the best system possible."

The Income Contingent Financing conference will take place in Brasilia, Brazil, from 10-12 July.