University finances, the census date and COVID-19

On Facebook I have seen undergraduate petitions calling for university classes to be suspended.  One person claimed that their institution was stalling until after the census date. This is the day when students became liable to pay their student contributions and the university becomes entitled to receive Commonwealth contributions, their government tuition subsidy.

In the Grattan report on dropping out I co-wrote a couple of years ago, we argued that the census date is an interesting and unusual feature of Australia’s higher education system. Effectively, it gives students a free try-before-you-buy option for every subject they take.

By law this period is at least 20 per cent of the semester, but on our analysis the median period before the census date was a quarter of the semester. Four weeks is common, with a census date at the end of March for first semester (earlier for universities with trimester systems).

In the other English-speaking countries we looked at students usually only have one to two weeks to change their minds without financial cost.

The late Australian date for dropping subjects or courses without cost transfers some enrolment risk from students to universities, who end up teaching students who never generate any revenue. Overall I think that is a good thing, as it creates pro-student incentives that would otherwise be lacking.

But when outlier events like COVID-19 hit, a long period before the census date increases institution and system-level risk. If classes had to be cancelled two or three weeks into semester student revenue would suddenly sink to $0. It would make Chinese students stuck overseas look like a trivial problem.

Unless a government rapidly legislated a bail out – the current legal provisions for university financial problems would be no use in such a scenario – many institutions would have to call in the receivers. It is a variation on what I think is the biggest economic problem Australia faces today – that many organisations could collapse because they cannot survive a temporary but massive decline in their revenue.

In the last couple of days many universities have suspended classes to give time to move teaching online, or plan to offer intensive on-campus teaching later. Despite cynicism on social media this is vastly preferable to the alternative.

If individual students don’t want to continue this semester then the long period before the census date protects them. In universities with semesters, most students still have time to drop out and pay nothing. There is some risk to university finances from students deciding to do this, but my guess is that the numbers doing so will be fairly small. As their personal risk of serious illness is typically low, and will be reduced further by online study, there is not much point in falling a semester behind.

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