The costs of unpaid higher education contribution scheme debts of graduates working abroad

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.