Two-thirds of all Australian university students live on less than $20,000 a year, with one in five surviving on less than $10,000, placing them below the poverty line and facing rising levels of debt.
A report by the group Universities Australia, to be released today, says the average debt carried by an undergraduate student has soared over the past six years, rising from $28,800 to $37,200.
The most financially stressed students are the new generation of students from poor families, whom the government has been targeting to increase the proportion of Australians with a bachelor's degree by 2020; more than 76 percent of undergraduates from low-income families say they are worried about finances.
The report, University Student Finances 2012, reveals that 17 percent of students went without food or other necessities because they could not afford them, a figure that rose to 25 percent for those from low-income families.
And while the number of hours in employment rose slightly to 16 hours a week and average income of undergraduates increased from $13,600 in 2006 to $16,900 last year, paradoxically there was also a marked increase in the reporting of financial distress.
The chief executive of Universities Australia, Belinda Robinson, said the impact of extreme poverty on dropout rates was unclear, but that the situation needed to be closely monitored.
"This is of particular concern in the context of meeting the government's goal to have 20 percent of students from low-SES backgrounds enrolled by 2020," Robinson said.
"With the youth job market getting tougher in areas such as retail and hospitality, we might see a dropping-off in enrollments among poorer students."
Robinson said the report showed many students regularly missed classes because of work commitments and the full-time, on-campus experience could potentially be under threat.
"It could point to an increase in part-time enrollments and more studying online," Robinson said. "There is no doubt it is becoming tougher to balance work and study."
Belinda Grant-Geary, a second-year journalism student at the University of Technology, in Sydney, said her experience paralleled the
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