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Australia explores student loans for internationals

In another competitive gesture, Australia has launched a research project to explore the viability of extending student loans to international students for the first time.

Over the next three years, they will look at whether HECS-style loans for international students are viable

The project will examine how international students could access new funding paths, such as the Higher Education Contributions Scheme (HECS) – the domestic loans system which allows Australian students to repay directly from their wages when they gain a high enough income (often described as “income-contingent” loans).

By investigating options that make studying in Australia more appealing and affordable for international students, it is hoped that higher numbers of students, including those from lower socio-economic backgrounds, will choose Australia.

This could be a lifeline for the country’s embattled education export industry

This could be a lifeline for the country’s embattled education export industry, which saw exports fall 15%  (AUS$2.7 billion) in 2011 – part of a protracted downslide caused, in part, by the tightening of visa regulations in 2009 and also due to the high value of the Aussie dollar.

Explaining their motives, Bruce Chapman and Glenn Withers, the academics leading the project, said in a statement: “Australia has been able to create a world-leading effort in international education and this has been supported by clever policies for agents, visas, work-rights and more. But as international competition in this field increases, further new approaches may be needed.”

The pair are both leading lights in Australian international education and bring considerable clout to the project. Chapman was the architect of HECS – which has since been adopted by countries such as the UK and South Africa – and Withers (the outgoing CEO of Universities Australia) invented Australia’s points-based immigration system; again adopted abroad.

Over the next three years, they will look at whether HECS-style loans for international students are viable, assessing the benefit, costs and obstacles such as fraud, and releasing their findings along the way.

Talking to the Australian, Chapman said that the $20,000 most international students had to raise for tuition each year threatened to restrict Australia’s competitiveness.

“If they could find a way of paying it back later, depending on their future income, that would take away a major barrier,” he said.

HECS could also compensate poorer countries such as India for brain drain

Chapman said that HECS could also compensate poorer countries such as India for the brain drain that occurs when their brightest students emigrate to work in countries such as Australia.

“[Those] who leave are usually the best qualified, so poor countries are heavily subsidising some of the richest countries. We want to think of a way of compensating governments for educational costs,” he said.

The research project will also explore how expanding HECS to cover living costs (the scheme currently just covers fees) could help widen domestic participation in higher education.

Part of this could include extending loans for Australians to study abroad, said Withers. “MBAs are full of this. You do a year at INSEAD and a year at the Melbourne Business School, and so on. As these sorts of arrangements emerge in a globalised world, funding is very important for Australian students who want to be international as well.”

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