A plan to allow young Australians to pay back university debts using their superannuation is bad news for women.
Western Australian Liberal Senator Chis Back wants the Federal Government to change the rules so that people in their 20s and 30s can use their super to pay off their student debts.
But for women in particular, that could spell disaster.
Australian university graduates owe tens of billions of dollars in student loan debts to the federal government.
A woman earning the median wage will take, on average, 12 years to repay her HECS debt. (The government doesn’t call it HECS anymore, but that’s what it’s generally known as, so lets go with it.)
For a man it will take an average of eight years.
A quarter of all women with a HECS debt (and you don’t have to graduate to accumulate one) will never repay it.
And while everyone will make at least some repayments, the government assumes around 16 per cent of all HECS borrowers will never repay the full amount.
Women pay back less, over a longer period of time than men do.
Why? Because they earn less than their male counterparts, and they take time out of the workforce to have children which puts them even further behind.
Well in that case, you might say, isn’t it a good idea to let women pay off their student debt using their accumulated superannuation?
Because the flip side of the can’t-pay-off-my-education-debt coin is that women are also at a disadvantage when it comes to accumulating super.
All the things that affect your ability to pay off your HECS also help to determine how much superannuation you end up with.
Right now, the average woman retires with around half the super of the average man. Only 12 per cent of Australian women are confident they will have enough to retire comfortably.
Single women are worst off when it comes to financial security in retirement, and the most likely to need to lean on the age pension to keep them out of poverty.
They are also a growing segment of homeless people across the nation.
Government policy should be aimed at increasing a woman’s super balance, not depleting it during the early part of her career, leaving her to play catch up over the decades when she is most likely to be in and out of the workforce, or only working part time.
We already know there’s an income gap between men and women, and we also know it only gets wider as women hit the glass ceiling or stop climbing the ladder to take care of children.
They need to bank as much superannuation as possible, as early as possible. And then that money needs to be able to mature and grow until retirement.