Should unis voluntarily cap student numbers?

From my perspective, the demand-driven funding system is Labor’s main higher education achievement (it’s described at pages 56-58 of this report). Over time, I expect it will drive a more efficient allocation of student places and through creating competition improve teaching and student services. Already we can see that a student’s chances of getting an offer in their first-preference field of study has improved in most disciplines:

offer rates
Source: DIISRTE. The figure shows offers in each field of study as a % of all first-preference applications for that field of study.

But uncapping the number of Commonwealth-supported students is costing a lot of money, a factor in recent higher education cuts. An article in yesterday’s AFR reveals that the universities want a de facto re-introduction of caps – not through changing the higher education funding legislation but through universities agreeing to constrain student numbers.

This would be a backwards step. The fear of losing students to competitors is a key driver of responsiveness to students, and a cartel-like restriction on places would be nearly as bad as the old regulated control.

7 thoughts on “Should unis voluntarily cap student numbers?

  1. I think uncapping of places has to go hand-in-hand with more detailed disclosure of graduate outcomes so that there can exist a feedback loop to prevent universities offering an infinite number of places in whichever course is popular and cheap to teach, irrespective of whether graduates can ultimately find work in that area. This is particularly important for professional courses, and maybe less so for courses like arts which teach skills that are more abstract and transferrable.


  2. There is graduate destination survey info on the My University website, though I don’t know whether many prospective students use it.
    What’s missing is easy access to student numbers by narrow field of study. Even supposed experts like me will not be able to say until late 2014 how many students enrolled in most narrow fields of study in early 2013, far too late to say whehter this looks like a likely over-supply relative to what is going on in the relevant labour market.


  3. That’s true, but the destination survey info is quite vague and unhelpful. From what I can tell it also suffers from reporting limitations.

    What I am talking about is data about how many people are enrolled in a particular course at a particular university, and detailed information about where these graduates end up what they are paid, say one year after graduation. This imaginary scheme would impose reporting requirements on students in acknowledgement of the government’s generous contribution to their education.

    I’m not an expert in this area so my idea could be fraught, but my basic point is that better disclosure of data is needed to increase competition between universities and to make enrolments more sensitive to what is going on in the labour market.


  4. If we linked everything up using the tax file number we could get more information. People like me always like more data, but I think there are lots of problems with these proposals:
    1) It’s very hard to sort out uni effects from individual effects and general economic trends.
    2) Information about current or recent past conditions are only moderately predictive of the future.
    3) Students choose to study and choose universities for reasons other than employment.


  5. You’re probably right on those three points, but the problem still remains that universities have no reason not to offer as many places in a course as they can possibly teach, with entry requirements lowered accordingly, whether or not the wide-eyed students have any prospect of finding work in their chosen field. I don’t think this entirely fair on students.

    For instance there are now 36 law schools in Australia, and as far as I am aware nowhere near that amount of legal jobs available. Law schools are increasingly telling students that law degrees provide useful and transferrable skills that will allow them to work in a range of fields, but I am not sure that all graduates are taking these jobs entirely by choice.

    Right now all students have to go on is glossy brochures, reputation, general chatter about the graduate market, vague and unhelpful graduate outcomes, and not much else. More and more detailed data would be very helpful.

    I’m not an economist or higher-ed expert but I also suspect that the cap on student contributions could also be partly to blame.


  6. Brett – See my analysis of law graduate outcomes. Though of course students don’t have detailed labour market information, I don’t think they are quite as naive as people assume. With the exception of the recent boom in science graduates, major trends in enrolments have had a basis in labour market reality. A 3 year out survey of graduates found that most would do the same degree again, even though the employment outcomes aren’t always great. (Main exceptions were IT and communications graduates). And of course we don’t know what their counter-factuals are – their higher ed outcomes could still be better than likely alternatives even if they are not fantastic compared to other graduates.


  7. I didn’t consider the point about counterfactuals, but that does make a lot of sense and is possibly the best argument against my gripe.

    Still, I know a number of law grads who despite decent marks/experience have struggled to gain employment in the legal sector. It’s hard to square such anecdotes with the analysis from your post, but I guess stats tell a fuller story. Another possibility is that 3 years is the minimum time necessary for a person to become resigned to their fate.

    Thanks for your replies.


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