Youth Allowance and course completion

The annual cohort completions statistics published by the Department of Education show that low SES students complete courses as lower rates than medium or high SES students. On the most recent figures 67 per cent of low SES commencing students had completed a degree by nine years after commencement. The equivalent figures were 72 per cent for medium SES students and 78 per cent for high SES students.

Youth Allowance and completion rates

In analysing the factors affecting completion, a Department of Education data integration project joins higher education enrolment variables with other government data, including income and student income support.

Their analysis suggests, as seen in the chart below, that receipt of Youth Allowance or Austudy is associated with increases in completion at the six-year point for students in all but the most advantaged areas, with the largest effects for students living in areas with the greatest levels of economic disadvantage.*

The analysis of the results is quite brief, making it hard to fully understand the effects of student income support. If I understand them correctly, they have controlled for full- or part-time study status. However, I would see getting students to study full-time as a major benefit of student income support. In the Grattan Institute dropping out analysis, studying part-time is the single biggest completion risk, and this is supported by the Department’s analysis, which includes additional variables Grattan did not have.

Financial stress

Another mechanism by which student income support might increase completion is through reducing financial stress. The Universities Australia student finances survey found that more than half of students were worried about their finances, and 15 per cent went without food or other necessities for financial reasons.

But Youth Allowance pays so little that it’s not clear how well it can avoid these problems. The Department’s analysis shows that full-time students who don’t get Youth Allowance had higher disposable income, $18,818 in 2015-16, than those who received Youth Allowance, $13,936.

Work and student income support

Another mechanism by which student income support might increase completions is by letting students spend less time working and more time studying. Unfortunately time use data is rare, so this hypothesis cannot be explored in any detail.

But at least on a binary complete/don’t complete measure (as opposed to average marks) more paid work does not negatively affect outcomes at the six-year mark up to earning $30,000 a year for full-time students, as shown in the darker-blue bars (the light-blue bars are part-time students).

I am not completely clear on how income was calculated, given that it fluctuates over time for many people. Working full-time over summer breaks could help resolve apparent inconsistency with the starting hypothesis, boosting total income while reducing how many hours students need to work during semester.

No employment income is associated with lower completions than any other income category. I am not sure how to interpret this result. On the Department’s data, many of the students who are not working are on income support, but in their analysis income support is a positive for completion rates.

Not working implies dependence on family or government, a situation that may not be sustainable and triggers departure from university into paid work.

Or it may be that not working is a partial proxy for personal characteristics or circumstances, such as being unwell, that are obstacles to both work and study. The Department found that mental health problems were a negative factor for completion, as was having a disability.

Trends in income support

For reasons what are not well understood, the number of students receiving student income support has been trending down, as shown in the chart below, although in 2020 there was a COVID boost that may translate into longer-term use of the scheme. From 2011 there were policy changes that aimed to reduce the number of middle class students receiving ‘independent’ Youth Allowance and shift support to students from poorer families through the dependent category, which has a parental income test. There might be some lagged effect of that in the numbers.

The only other big policy change I can think of that might have had an impact was the conversion of the Start-up Scholarship to a loan over 2016 and 2017. The scholarship gave twice annual lump sum payments of about $1,000 even for students who were on low fortnightly rates of income support, due to their own or their family’s income. Possibly without this incentive some students decided to avoid engaging with Centrelink bureaucracy.

Conclusion

Despite low rates and restricted eligibility the student income support system seems to be quite successful in boosting course completion, a key policy goal. Trends in student income support recipient numbers need further investigation, to better understand why they are declining and whether this is a problem.

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*This analysis uses a different measure of disadvantage to the official equity statistics – the index of relative socio-economic advantage and disadvantage rather than the index of education and occupation. In the work I did on attrition with my then Grattan Institute colleagues we made the same decision, on the grounds that while the cultural factors captured in education and occupation data are likely to better predict participation rates than financial factors, an economic index would better measure the capacity to stay enrolled.

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