My new Grattan report, Graduate Winners: Assessing the public and private benefits of higher education was released tonight (Canberra Times covering it already).
The basic argument is that given high private benefits, higher education will generally be produced with or without a tuition subsidy. Therefore we can start phasing down tuition subsidies. I suggest 50% over 4 years for most disciplines.
The usual reaction to such suggestions is that the low SES people in particular will be put off higher education. I report the contrary Australian evidence. There is interesting English evidence in this report. What the English have done is far more radical than anything I am suggesting. Except for the clinical and lab subjects, they haven’t cut 50% over 4 years. They have cut 100% over 1 year. Combined with some scope for overall funding increases for universities, some student charges will nearly triple.
For the school leaver group, overall demand dropped by one percentage point of the age cohort compared to 2011, or about 15,000 people (like Australia before 2012, the UK has a capped system with demand exceeding supply, so this will have no effect on the total number of students).
The figure below looks at 5 SES quintiles, using a geographic measure (the red line is the lowest SES group). Applications from low SES groups responded less than from high SES groups. It is also interesting that numbers started declining from the trend in 2011.
Low SES people are often assumed to be irrational – spooked by fees or debt, and unable to determine their long-term interests. Whether or not that is true generally, those who make it to the end of school are different. The evidence from Australia and elsewhere is that given their realistic options school leavers across the SES spectrum make very similar choices.