The Costs of Unpaid Higher Education Contribution Scheme Debts of Graduates Working Abroad

Abstract

The Higher Education Contribution Scheme (HECS) is an income‐contingent loan designed to collect tuition from Australian university students. The debt is collected on the basis of recorded incomes and, as a consequence, debtors living overseas will not repay. Using various data sources and assumptions, multiple scenarios are considered in order to estimate the extent of uncollected overseas debt. A conservative estimate of the amount of foregone HECS revenue for the 1989–2011 graduate cohorts working overseas is over $400 million, but it is shown that, under other plausible assumptions, the foregone revenue may be close to double this amount.