Has the university funding freeze caused commencing enrolments to fall?

The 2018 higher education enrolment data, published yesterday (yes, it should be released much earlier than late October), showed a rare fall in public university domestic commencing bachelor degree students. Both a headcount and full-time equivalent count show a decline of about 0.8 per cent compared to 2017.

2018 was also the first year post the demand driven system, the practical implication of which was that universities would not be paid Commonwealth contributions for enrolling additional students. Indeed, there is a financial incentive to let the number of student places fall.

So is this cause and effect, with changed funding rules causing enrolments to decline? I have no special insight into the strategic decisions of universities, but overall this trend looks to be driven by weak demand more than an unwillingness to supply student places.

As the chart below shows, applications trended down in 2018 and 2019 and offers (willingness to supply) followed this trend. Offer rates were stable: 83.2 per cent in 2017, 83.8 per cent in 2018, and 83.6 per cent in 2019. If universities were actively trying to reduce numbers we might expect offer rates to go down, but this isn’t happening.

applications down 2019

Grattan’s 2018 dropping out report showed the complex relationship between applications and enrolments: not all applications result in offers, not all offers lead to acceptances, and not all acceptances result in enrolments that reach the census date. But comparing 2017 and 2018, of the 23 universities with falling commencing domestic bachelor enrolments 16 had also experienced declining demand.

Earlier this year, I noted that in applications lodged in 2017 for the 2018 academic year declining demand was concentrated in the age 20 and over market. The age pattern in actual enrolments matched this demand trend, as seen in the chart below.

age enrolment 2018

None of this data rules out fewer student places being offered at some universities or for specific courses. Applications exceeded offers even without funding caps. But in the aggregate enrolments still look demand driven, and would have fallen in 2018 and probably 2019 even if funding had not been capped in 2017.

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