Gough Whitlam abolished university fees in 1974 and spent much of his later life lamenting over his own party having brought them back.

While Malcolm Fraser's Liberal government toyed with the idea of re-introducing fees, mandated payments didn't actually return until 1989 thanks to Bob Hawke's Labor government and the loans program known as the Higher Education Contribution Scheme.

The scheme was clever, contingent on income and similar to what was being adopted worldwide at the time.

Since then, both sides of politics in Australia have agreed that students should contribute to the cost of their higher education and that such an imposition does not discourage applicants from disadvantaged backgrounds to the degree it might have in Whitlam's day.

But bipartisanship on the issue pretty much ends there.

How much to charge students, when to apply the debt and all manner of detail over how a higher education loans scheme should work has long been fodder for heated political debate.

Schemes have changed, been renamed, re-badged and overhauled so many times that charging students for their higher education has become a complex hot-pot that only gets hotter the closer we get to an election.

So an independent report out this week by the Parliamentary Budget Office predicting the higher education loans program having a huge impact on the federal budget, has lobbed somewhat of grenade into the debate.

With it comes the implication for students that fees could potentially spiral out of control. It could all be enough to make Gough turn in his grave.

HECS has had a number of makeovers through the decades, eventually morphing into the all-encompassing Higher Education Loan Program (HELP), covering both university courses and vocational training.

The PBO analysis has projected the loans scheme costing the annual budget $11.1 billion by 2026, which is a 560 per cent increase on the current $1.7 billion.

The figures factor in doubtful debt, loans that will never be repaid, as well as the scheme's generous interest rates.

And it shows the total value of the student loans program growing from the current $60 billion to $185 billion by 2026.

For political players, this is a two-edged sword.

The numbers support the government's insistence that escalating costs must be controlled, but it also throws up a significant challenge.

A major factor contributing to the projected cost blow-out identified in the report is the proposed deregulation of university fees.

Education Minister Simon Birmingham insists some form of deregulation remains on the table.

Since the PBO report, as well a Fairfax Media confirmation that major cuts to education spending will feature strongly in the May budget – Senator Birmingham has been keen to state the government's position.

"We need to make sure, in higher education . . .  our promises and our policies are affordable," he said after the report's release.

"That will be outlined clearly in the budget and during the election campaign."

On university fee deregulation, he said the government was still consulting over what form that could take, but that it was important to give universities opportunity and incentive to be innovative and to differentiate.

The PBO report attributes the projected cost blow-out not only to deregulation of uni fees but also to other factors, such as uncapping of student places and the fact that loans have expanded to include vocational students.

There are policy implications for both parties.

But Labor says the budgetary problems facing the government are all of the Coalition's making.

"They took a policy position to the last election of no cuts but then they had this radical change without talking to anyone," shadow minister for higher education Kim Carr said.

"And when it comes to the specific problems that would be caused by deregulation of the uni system, it's simple – don't do it.

"This is all about transferring the cost of universities to individuals. It's socially unjust and it's unnecessary, but it's also highly inefficient. It ends up with so many debts remaining unpaid.

"Some might say that it doesn't matter to those individuals, but it does because they go for a bank loan later on and they have this lifetime of unpaid debt hanging around their necks."

Shadow minister for vocational education Sharon Bird says one of the reasons for the escalating Vocational Education and Training FEE-HELP debt has been the government's refusal to stop the blow-out in fees as unscrupulous providers have entered the market and charged exorbitant amounts for their courses.

"Students are ending up with debts for diplomas higher than a university course would cost," she said.

Senator Birmingham says he is mindful, when it comes to uni deregulation, of making sure taxpayers and students are protected from the types of fraudulent rip-offs seen in the VET sector.

Australian National University associate professor Benjamin Phillips believes the PBO report "has been pretty conservative in terms of price increases" and says it is "certainly a minefield for the government".

Professor Phillips believes the projections will lead to changes in fiscal policies and could see the mooted debt recovery from deceased estates become a reality.

But he says full deregulation of university fees is unlikely to be legislated.

"And really, the government doesn't seem to be pushing too hard for it from what I've seen."

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