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Costs Shift to Students in Australia
Government's "radical" changes will let institutions set their own tuition fees and require students to pay interest on their loans at lower income thresholds.
Australia's conservative government this week proposed a raft of drastic changes to higher education policies that will, taken together, mean that students are picking up a significantly greater share of the cost of their educations.
The government, in its 2014 budget plan, gave universities the green light to set their own tuition fees. Speculation immediately began about how high some institutions might set their fees.
At the same time, the number of undergraduate students under the country's "demand driven" system will balloon from 470,000 to 620,000 as government subsidies for institutional operating costs are extended to vocational providers and private colleges, as well as to sub-degree programs such as diplomas. The government estimates the expansion will cost $820.4 million over three years from the beginning of 2016.
To fund the extra places, the government will also institute a raft of changes to the Higher Education Loan Program, commonly known as HECS. The new policies will require university students to pay interest on their student loans and start repaying at a lower income threshold.
In a radical departure from the current loans system, students will be asked to pay real interest on their loans up to a maximum of 6 percent. And the salary level at which they start repaying will slip to $50,638 in 2016, from the current $51,309.
The changes come at a time when employment rates for new graduates are expected to fall 6 percentage points, from 76.4 percent last year to 69.9 percent in 2017. At the same time, graduate starting salaries will drop from 77.8 percent of average male weekly earnings to 74.3 per cent, according to government projections. The Australian government’s justification for the most radical overhaul of the higher education system in decades is “to promote economic productivity and social well-being.”
“The government’s reforms will underpin the development of a world-class higher education system through delivering choice and opportunity to any student, wherever they study and whatever they choose to do,” the budget papers say.
Elite sandstone and metropolitan universities will be expected to hike fees dramatically for high-demand courses such as medicine and law, which potentially could see graduates leaving with $200,000-plus debts.
To ensure elite universities do not become the preserve of the rich, the government has said that $1 in every additional $5 in revenue universities receive will have to be set aside to fund scholarship schemes for financially disadvantaged and regional students.
“Universities will be able to compete to attract students because they will be able to set their own tuition fees for the courses they offer,” a budget statement said.
The new fee and HELP loan provisions will not affect students who have commenced or deferred a course until 2020. The Tertiary Education Quality Assurance Agency, which commentators say will be essential to preserving quality and ensuring dubious colleges are kept out, will see its regulation and quality assurance budget halved.
While some universities will reap additional revenue from fee hikes, they will still be hit by a $900 million efficiency dividend introduced in last year’s budget by the Rudd government. The cuts, which are now opposed by Labor, have yet to be introduced to Parliament. The Abbott government has also cut a slew of research programs, imposed an efficiency dividend on the Australian Research Council and merged the Education Investment Fund with its newly announced Asset Recycling Fund.
But the National Collaborative Research Infrastructure Strategy was revived, with a $150 million commitment over 2015-16.
Belinda Robinson, who heads Universities Australia, said in a statement that the government's proposed changes -- which the group's statement called "radical" -- would "fundamentally alter the shape of Australian higher education.”
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