The impact of HECS debt on Australian students' tertiary academic performance

Abstract

The Australian literature suggests that students' academic success in tertiary education is principally influenced by their university entrance score. Personal, secondary school and university characteristics have more minor impacts on tertiary outcomes. Little research has been undertaken into the relationship between students' marks and the financing arrangements for their tertiary education. This paper investigates the links between the achievements of university students and the debts incurred under the Higher Education Contribution Scheme (HECS). It finds that students who accumulate a HECS debt have lower marks in first year than students who pay their HECS liabilities up-front. Students who defer their HECS also have a lower probability of continuing their studies beyond first year. These effects are statistically significant, although they are smaller than the effects of gender, school type and the Tertiary Entrance Ranking (TER). However, the means of financing their university study does not appear to affect students' marks beyond the first year. The implications of these findings for future research are explored, with particular reference to Tinto's (1975) interactionalist theory of higher education outcomes. The possibility that HECS is a proxy for family background is also explored.