Thanks for your thoughtful comment. I apologise in advance for not addressing all of it. You seem to be discussing the funding of tertiary education provision, as opposed to funding living costs for people while they are postgraduate students. I was trying to stay away from the subject of tertiary funding here because there are many more issues that bear upon it, particularly the externalities of tertiary education.

As discussed in the comments above, I think the lack of participation among people of low socioeconomic is certainly a problem. However, the question is whether the allowance for postgraduate students has a significant effect on that participation rate. I think it unlikely that it does and, moreover, I think the allowance for postgraduates is inequitable, as you picked up. The question of financial assistance for people from poor backgrounds who wish to obtain initial tertiary education seems quite separate.

The reason allowances for postgraduates are inequitable is that they are funded out of general taxation. Postgraduates already have very high earning power as a consequence of their undergraduate degrees and benefit further from their postgraduate education. I don’t see a good reason for society to subsidise their living arrangements when they are already so rich in assets (meaning their human capital.)

That the subsidy is paid out of general taxation means that part of it is paid by low income people and those without a tertiary education. Essentially, we are taking some of their money to fund the lifestyle choice of a wealthy graduate student who prefers to obtain further education.

*$200000-300000 more in tax during their working life.

I see why you might be in favour of progressive repayment, but I’m not sure what problem it solves. The reason the loan scheme is expensive is not that successful graduates don’t pay their loans back. It’s mostly because the government pays the interest on the loans. It’s also partly because there are lots of graduates who earn below the repayment threshold, and a small part of it is the graduates who go overseas and don’t repay.

I suppose a progressive repayment regime would decrease the cost of interest, although I don’t know by how much. I think to make it a good idea you have to assume that introducing interest is not feasible, otherwise the interest reintroduction solves the entire problem. If it is infeasible then perhaps the progressivity is a good proxy, though.

The increase made this budget (accross the board from 10 to 12%) which be much harder for lower income individuals to manage, than craft beer drinking professional services graduates. *Insert generic arguments for progressive policy*. So there’s an argument there about ability to pay.
And many of the generic arguments against progressive taxation don’t easily apply. Graduates are unlikely to “work less hard”, I’d say, because the work they are doing is laying a foundation for a whole career, for most of which they will have a student loan. Progressive repayments shouldn’t “drive graduates overseas” because if they do go overseas they will bare interest on their loans, more in fact than under current policy.
The argument for government support of tertiary ed is that it recognises public benefits from an educated populace. But there is invariably also a personal benefit, as you outline in your main post. I would hazard to guess that personal benefit accrues more and faster to folks that earn more. Having to pay off a loan faster counter-balances that somewhat.
The final argument is framed politically: assume that for whatever political reason interest reintroduction (or even CPI adjustment) is off the table, there are few mechanisms left for decreasing generosity. If you agree the system is too generous, this is a politically viable option with left-right crossover appeal.

Thanks for your comment Joe; you’re making me blush!

I agree that the poor participation rates of students from a low socioeconomic background are a problem; however, that is unlikely to be affected by restricting student allowances to undergraduate courses. Moreover, the barriers you identify, such as the lack of role models, may be a greater difficulty to overcome than the need to take out a loan. Certainly, it is something that I’d hope would be carefully considered if further cuts were to be made to the allowance scheme.

I haven’t really thought about progressive repayment; what’s the rationale? If it’s wanting loans to be paid off then why not have a repayment scheme as for private loans, but with a rebate for low income earners? I think that simply reintroducing interest on the loans would be a good start, though.