In The Australian this week, Buly Cardak suggested that university fee deregulation could undermine private schools. Under the current system he suggests that parents pay large sums to private schools to maximise their child’s ATAR, which in turn increases their chance of getting into their desired university course. However, this may become more complicated in future.

With fee deregulation there will be a shift from competition on ATAR only to competition on ATAR and tuition fees. This could well have a ripple effect on the fees charges by private schools.

It is certainly possible that some high ATAR students would decide not to pay the fees Group of Eight universities charge, and go for better value for money options at other universities. However, this does not necessarily mean that ATAR cut-offs at Group of Eight universities would go down.

The reason that ATARs may not change, or even go up, is that under fee deregulation Group of Eight universities could change their business strategies. To generate profits under the current system they operate high-volume/low-margin businesses for Commonwealth-supported students. But with fee deregulation, they could go for lower-volume/higher-margin business to generate the same or more profit on fewer students. Smaller intakes can allow higher cut-offs, even if some high ATAR students go elsewhere.

The Group of Eight are still likely to have plenty of academically strong applicants. For students interested in research or researchers, the Group of Eight will still be dominant. For students interested in prestige, the Group of Eight will still be dominant. They will still have well-located campuses. And for high-ATAR students interested in meeting other high-ATAR students, it is hard to imagine how the Group of Eight won’t still have the highest concentration, even if they don’t have quite the same total number as now.

So it will still be difficult to get into Group of Eight universities, and there will still be powerful incentives to maximise ATAR scores.

There are other assumptions in Buly’s article that give us further reason to doubt that private schools would suffer financially from fee deregulation.

His agument assumes that large numbers of families make financial trade-offs between school and higher education. Although some parents do pay their children’s higher education student contributions, most don’t. Upfront payments have been steadily declining, down to 16.4% in 2012, compared to 22.5% in 2005. Generally, parents pay for school and children pay for higher education through the HELP loan scheme.

We should also be cautious about the idea that ATAR factors are dominant in the decision to use private schools. Research into parental choice of schools has found that it is values, discipline and especially religious factors that are typically most important. The cost of higher education won’t change any of these factors.

If parents used private schools for university admission more generally, the demand driven system might have led to reduced need for private school ATAR-boosting. It’s still hard to get into Group of Eight universities, but it has never been easier to get in somewhere. But so far this is not showing in school enrolment data.

My best guess is that higher education policy will have little effect on private schools.

Update: This idea is popular with University of Melbourne academics: here and here.