[abrimo]

I grew up in the US however I'm Australian and attended university in Australia.

The Australian system (HECS http://en.wikipedia.org/wiki/Tertiary_education_fees_in_Aust...) of managing higher education costs seems very fair. I studied two degrees at a leading university over 5 years. The accumulated cost for five years was about $30-35,000 for Engineering and Politics (some degrees are more expensive). My degree cost the university more than I paid with the remainder being covered by international students (thanks!), government subsidies/grants and donations.

All local students entering a university automatically go into this system. Each year you get a statement that lets you know how much debt you've accumulated and how much is left to pay. If you want to pay upfront then you receive a discount (10-20% off or something). However almost no one does because your debt is interest free and only indexed to inflation.

You don't start paying it off until you earn over $49,000/year (http://www.ato.gov.au/individuals/content.aspx?doc=/content/...), at which point you pay about 4% of your income until you've paid it off. If you earn more then you pay it off more quickly and at a higher percentage.

This system has enabled me to work on my startup right after finishing uni without the burden of a debt that needs to be repaid immediately. It also let me focus on enjoying university without upfront costs. I think it also removes the cost barrier for students wanting to go to uni, as all universities cost the same and are all covered by HECS. You can decide where to go based on convenience, degree and anything else without worrying about the cost.

Lots of people here still complain about the cost and the system could surely be improved a bit. But it's quite a good solution and I'm glad the article mentioned it.

[sliverstorm]

So if the debt is interest-free, who foots the missed opportunities for capitol gains?

(The school has to pay its operating costs, so these are at least partly real expenses, not numbers in a ledger.)

[abrimo]

The university is paid upfront by the federal government so it can still cover all of it's costs. The taxation office then collects the repayments, which are just taken out of your income.

There are risks for the government. For example, lots of Australians work overseas and unless they return to Australia to work, they won't pay back the debt. http://theconversation.edu.au/expat-workers-have-cost-austra... But that's probably not a huge percentage of outstanding debt.

[Retric]

The 10-20% discount is just another way of saying the loans have a direct cost of 10-20% and then get indexed to inflation. With that 10-20% upfront cost plus inflation adjustments work out close to the same net cost as my 3.2% student loans in the US assuming you pay them back in a 10-20 year time frame.

[jessriedel]

In other words, the government is subsidizing the loan just like in the US.

[rayiner]

Capital gains.

[Florin_Andrei]

Two observations:

A) That's awesome.

B) It's highly unlikely that it will be implemented in the US - not given the recent trends in this country.

[rstevenson542]

Our government is too bloated and inept to adopt educational reform that makes that much sense.

[rayiner]

That's a cop-out. It's not that our government is too dumb to implement a system that works just fine in another first-world country, it's that our politicians are too ideological to adopt such a system and our business sector is too anti-social to allow such a system.