Has abolishing the discount for upfront payment of student contributions made a difference to upfront payment rates?

An article in The Conversation on incentives around student contribution payments made me wonder what difference the 2017 abolition of the 10 per cent discount for paying upfront was having.

The discount had a cost to taxpayers, since universities were compensated by the Department for upfront payment discounts. If students pay upfront, the risk of the remaining debt not being repaid is removed, as is the interest subsidy for the time that repaid debt is outstanding. The discount is only worthwhile from a taxpayer perspective if it induces upfront payments on a sufficient scale to reduce doubtful debt and interest subsidies by more than the cost of the compensation to universities.

At the time, I supported the decision to abolish the discount, because I doubted that it was generating a net financial benefit for taxpayers.

One reason for this is that various sources of evidence over the years suggested that upfront payments were coming from sources unlikely to be very sensitive to discounts. These include parents wanting their kids to be free of debt, employers, and scholarships. In the 2012 student finances survey, for example, 9 per cent of undergraduates reported receiving money to pay tuition fees. Read More »

The uses of ATAR

In the last few weeks, the Australian Tertiary Admission Rank (ATAR) has come under renewed criticism. A paper from the Mitchell Institute started this, and Swinburne University VC Linda Kristjanson followed up with an op-ed on one of their alternative entry systems.

These critiques have a history. More than 20 years ago, then education minister Amanda Vanstone gave a speech attacking the ‘tyranny of the TER’, an ATAR predecessor called the Tertiary Entrance Rank. ATAR’s decline has long been championed. But despite what the Mitchell paper suggests, ATAR is still used in the vast majority of school leaver university admissions (Mitchell’s numbers are due more to the rise of other academic results, such as past higher or vocational education, than non-ATAR school leaver admissions, although these are also increasing).

Some form of ranked school results has been used for university admissions since the 1960s. Previously it was enough to ‘matriculate’ (complete Year 12), but demand for higher education was exceeding the places available, and so school results were used to allocate places to applicants. But this history shows that there is an alternative – admit everyone who meets some basic threshold, and then cull them. University policy reviews from the 1950s and 1960s report fail rates that are very high by today’s standards.

There is something to be said for this admit-and-attrit approach to selection – let applicants try university and see how they do. It avoids proxies based on an imperfectly-analogous environment such as school, or admissions tests that can potentially be gamed or only measure some attributes needed for success at university. To a substantial extent, as a forthcoming Grattan report will show, trial-and-error selection after enrolment is still a major way of deciding who gets a longer-term university place.

But issues of fairness, efficiency, and student protection work in favour of retaining an active role for universities in selecting students. Read More »