Prospective university students who might be influenced by student contributions

For prospective students with clear career goals, it is unlikely that changes in student contributions would change their minds.

But not all students are in this category.

In an ABS survey, about 10 per cent of bachelor degree students gave interest or enjoyment as their main reason for study. Purely interest motivated students can’t so easily justify paying increased student contributions as still a good investment in increased lifetime earnings. They need to consider whether the study experience itself is worth the fees they will pay.

My attempts to use the ABS training survey to identify the interest or enjoyment motivated students hit a wall of high relative standard errors. Even after combining fields into clusters of plausibly related fields only one, arts and creative arts, reached statistical significance. Although due to sample size issue we can’t reach firm conclusions from this source, it seems plausible that arts and science would have the highest proportions of mainly-for-interest students.

The annual price of a science course would drop by $2,000 a year under the Tehan plan; anyone willing to pay $9,700 out of interest will pay $7,700. But with humanities other than English and languages increasing from $6,800 to $14,500 a year there may be some second thoughts for some prospective arts students.

There may also be course-demand effects beyond those who tell the ABS their main reason for being at university is interest. In 2016, the last year for which I have data, eight per cent of students were in combined degrees. Course Seeker shows lots of pairings between arts and more vocational degrees: arts/law, arts/commerce, etc. Perhaps for some prospective combined degree students arts will become an overly-expensive luxury.

Another group who might think again are prospective students who are uncertain about their direction. Their share of respondents in the first-year survey increased in the two decades to 1994, to about 20 per cent who say that they are just ‘marking time’ at university, as seen in the chart below.

The survey report says that three-quarters of marking-time students were clear about why they were at university. And most of them must have agreed that studying something that interested them was a reason for enrolling.

But clearly they are not strongly committed to whatever course or university they have chosen. According to the survey report, a third of marking time students were enrolled in ‘cross-disciplinary’ (combined degree?) fields. Another fifteen per cent were enrolled in ‘society and culture’ courses (which include the humanities). Spending $14,500 ‘marking time’ in an arts degree would be an expensive way of deciding what to do next.

On the other hand, cutting student contributions in teaching and nursing courses to $3,700 a year perhaps encourages speculative enrolments from students who are uncertain what to do next. A first-semester trial enrolment would cost $1,850.

In drawing attention to student contribution increases, humanities advocates may also be making price more salient in the minds of still-wavering applicants for 2021 admission. Prospective students who have already psychologically committed to a choice are probably less likely to change course preferences than those still in the decision phase. However, publicity effects will wear off as the political debate ends.

And, as I noted last week, permanent residents and New Zealand citizens who must pay their student contributions upfront might reconsider whether courses with increased fees are feasible.

Overall, then, I think the newly high-priced courses might suffer some loss of market share from applicants who are not expecting a financial return, or who are not firmly committed to their choice.

This would affect arts more than business or law, partly because arts has more current students in these categories, and partly because high student contributions are factored in to existing business and law applications. $11,355 a year is already an expensive way of exploring interests or marking time.

6 thoughts on “Prospective university students who might be influenced by student contributions

  1. When fees were increased markedly in 1997 the share of enrolments dropped markedly for part time and mature age students, categories which overlap. I am not sure that these students have recovered their shares before 1997.

    One hypothesis is that part time and mature age students are more likely to earn above the loan repayment threshold and are more likely to enrol in full fee paying postgraduate programs and for these reasons are more likely to be more sensitive to fee changes.

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  2. Thank you Andrew. Is there any evidence that low SES students are more price sensitive in terms of subject choice? Even at undergraduate level?

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    • There is no evidence that students from a low socio economic status background are more sensitive to fees backed by a well designed universal income contingent loan:

      Chapman, Bruce and Ryan, Chris (2005) The access implications of income related charges for higher education: lessons from Australia, Economics of Education Review, volume 24, number 5, pages 491-512.

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      • I understand that there appears little empirical support for low SES price sensitivity, but I was stuck by how qualitative perceptions of loans are experienced differently by different types of students in the UK. I am now less certain that it is just a “deficit model” (incomplete understanding of the system rather than from the system itself) for students who are concerned.

        Diane Harris, Katy Vigurs & Steven Jones (2020) Student loans as symbolic violence, Journal of Higher Education Policy and Management, DOI: 10.1080/1360080X.2020.1771507

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      • Indeed, there seems to be more low ses price sensitivity in England (I don’t think that Scotland is so relevant to Australia), for reasons I don’t understand. Perhaps it is because there was less bipartisan support for income contingent loans in England.

        On the other hand, many of the English studies including Harris, Vigurs and Jones (2020) are about perceptions, not behaviours. I don’t think low ses people saying that they are or would be discouraged by fees is as important as whether fees actually affect prospective students’ enrolments, and there seems to be weaker evidence of that, even for England.

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  3. I must admit that the tendentious sounding title put me off reading that article. Overall, I think the benefits of fees+loans systems outweigh concerns about the practical and psychological impact on some students/graduates, especially as some of the concerns are not very well-founded, and there is as Gavin says little evidence of significant behaviour change. However the English combination of high debts, real interest and low annual repayments except for high income earners means that a large proportion of borrowers will have debt hanging over them until it is written off at the 30 year point. In Australia it is possible to have the debt for the remainder of your life, but at least last time we tried to project outcomes most people would repay in full, usually in much less time. However, the current thresholds (after our last attempts to model lifetime consequences) will slow repayment down.

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