How much is the 2020 higher education assistance package worth?

Update 28/04/20: It now seems likely that there won’t be additional higher education places beyond 1000 places for non-university higher education providers. This would revise down the potential value of the package by about $100 million, to around $500 million – but noting the substantial uncertainty in the original post.

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In today’s media, there are some very large estimates of likely international student fee losses. The federal government is not compensating universities directly for falling international student revenues, but as outlined in my blog post on Wednesday they have announced measures focused on domestic students.

Calculating the financial impact of these measures is not easy. We don’t know what impact COVID-19 has had on domestic student numbers, although some universities had soft demand before COVID-19 disrupted on-campus classes. The University of Sydney has reported that its domestic numbers are down nearly 5 per cent on expectations, but that could be due to a tough NSW market.

Many universities have delayed the census date at which Commonwealth and student contributions are triggered, and so they won’t know for sure what their first semester situation is until that day has been reached. Nor do we know what will happen in later semesters. It may depend on whether campuses can re-open.

The limited anecdotal information I have received suggests that first semester domestic student numbers are largely holding, so I have based my estimates on a 3 per cent decline in full-time equivalent enrolments against original expectations. Obviously, if the true number is higher or lower that affects the figures I provide below. I have applied this 3 per cent to the student-number driven parts of the Commonwealth Grant Scheme, HECS-HELP, FEE-HELP, and SA-HELP.

This would give universities about $214 million in CGS payments that would otherwise be withheld, and $173 million in HELP loans that would otherwise not be advanced. The HELP money needs to be repaid between 2022 and 2029.

The financial impact of the proposed short courses takes me further into speculation. I don’t know a) how many universities will sign up to this; b) how much of it will be funded within existing allocated load as the Department’s FAQ’s require where possible (in which case, the 3% would be revised down); c) how willing the Department will be to fund additional places beyond existing maximum basic grant amounts (email us they say; it sounds like they hope for an empty inbox); d) how much student demand there will be; or e) what disciplines the students who sign up will choose.

At the risk of giving back of the envelope calculations a bad name, I have assumed 15,000 half-year places (0.5 EFTSL) at unweighted average Commonwealth and student contributions for the fields listed in the FAQs. A media report had cited a figure of 20,000 places– I am not sure whether that was an estimate of demand or a cap. I discounted it down to 15,000 on the assumption that some places will be within previous allocations.

If these assumptions are roughly right, which is a big if, the short course proposal is worth about $136 million in Commonwealth and student contributions.

Add in $100 million worth of regulatory fees waived or refunded, and the package is worth $623 million – give or take quite a lot.

The package reduces 2020 domestic market anxiety, but as my estimate is roughly what UNSW alone thinks it has lost this year it will not remove the need for significant job losses.

new cash flow

 

 

 

 

One thought on “How much is the 2020 higher education assistance package worth?

  1. It’s matter for another piece, but it will be interesting to see what kind of indirect compensations government will countenance for changes to the international student prospectus. Institutions may really have to reformulate their offerings. Alternative working-age immigration channels are easy enough to develop, but that could really pinch student visa appeal.

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