By Phil Mercer BBC correspondent in Sydney

Australia's system of pay-later university funding is being considered for transplant in the UK.

The scheme swept away free education in Australia in the late 1980s.

The Higher Education Contribution Scheme - or HECS - is built on the principle that students should pay for their degrees after university, not before.

The architect of the scheme is Professor Bruce Chapman, an economist at the Australian National University in Canberra.

He told the BBC the scheme had proved to be fair and equitable since it was introduced in 1989.

It hasn't been a huge weapon in encouraging a whole slew of new people to come to university Gavin Brown, Sydney University

"It's not useful to think of HECS as a big debt people carry around because basically it's like paying a small amount of additional, marginal income tax of about 2 or 3% a year for about eight to 10 years beyond that," he said.

The key to HECS, according to Professor Chapman, is that it only demands repayment when an individual is in a realistic position to do so.

"If you cannot afford to pay in a given year because you're unemployed, or you're in a part-time job or you're in a job with a low income then you pay nothing in that year."

Graded fees

Repayments start after graduation and are triggered when pay reaches a certain level, currently set below the average wage.

Graduates are charged between 30 % and 40% of the cost of their studies. HECS is divided into three bands.

Courses like medicine and law attract higher fees than social studies and the arts.

The programme is larger and more developed than the system of deferred fees in Scotland and contributes around 10% to the total higher education budget in Australia.

Debt aversion means education aversion John Watkins, Education Minister, NSW

Supporters of HECS believe it is socially progressive but its critics claim the opposite, that it has prevented students from less advantaged backgrounds from studying at university.

The National Union of Students (NUS) argues Australia's pay-later system is a barrier to higher education and discriminates against the poor.

NUS President, Moksha Watts told News Online it discourages people from low-income families from applying for a place at university.

"I went to a very disadvantaged public school and most people around me did not go to uni because it something which was seen as inaccessible, expensive and the playground of the elite," she said.

Burden

John Watkins, Labor's Education Minister in the New South Wales state government, says the major disadvantage of the system is that it fails to make higher education attractive to everyone.

"If you come from a family or a community where tertiary education is not favoured, where it's not common, quite often people don't see the value of it as clearly," said the minister.

"If it comes with the extra burden of a major debt it's another factor that drives them away from choosing that. Debt aversion means education aversion."

Extra revenue

The vice-chancellor of the University of Sydney, Professor Gavin Brown, describes it as 'an excellent scheme' but warns that certain adjustments still need to be made.

"It hasn't been a huge weapon in encouraging a whole slew of new people to come to university. I believe the threshold for repayments has not been set low enough," Professor Brown told the BBC.

"If the rationale of having a scheme like this is that personal benefit comes from higher education, then surely the repayments should not really start until that benefit does become personal."

The Australian government estimates the vast majority of graduates - more than 90% - finish their courses owing less than �6,000 pounds (AUD $16,000), that's roughly half of the average annual salary.

Ministers insist HECS has helped raise extra revenue to expand and improve university tuition across Australia.