Bonded scholarships for nursing students in Victoria

The Victorian government has announced an incentive program for nursing and midwifery students. For 2023 and 2024, students enrolling in nursing and midwifery ‘will receive $9,000 while they study and the remaining $7,500 if they work in Victorian public health services for two years.’

In a quote provided to the media, Premier Daniel Andrews says “If you’re in Year 12 and you’ve been thinking about studying nursing or midwifery – go for it. We’ve got your HECS fees covered.”

Are student contributions covered?

Student contributions (‘HECS fees’) for a 3 year nursing course are about $12,000 on current student contributions, so the initial $9,000 assistance while studying will not cover them in full.

Student contribution reform may start in 2024. Increasing the current $4,000 student contribution band that includes nursing is a plausible outcome, to reduce the debt burden of arts students. If so, that will increase the gap between the scholarship and student contributions.

On any scenario, nursing students who complete their degree will need to pay student contributions upfront or incur a HELP debt.

Bonded scholarships

However, if nursing graduates remain in the Victorian public sector workforce for two years they will become entitled to another $7,500, which should be enough to clear their remaining HELP debt if the original $9,000 was put towards student contributions.

This makes the scheme look like the bonded scholarships that were once a common way of retaining early career workers. They are still used in medicine.

This could be the principal benefit of the policy for the Victorian public sector. Unfortunately I don’t have more recent data but in 2016 about 30 per cent of young nursing graduates in Victoria worked outside the public sector. Obviously, however, the public sector taking a larger share of nursing graduates could mean shortages in non-public sector health institutions.

Presumably, however, there will be no guarantee of a Victorian public sector job and so not all nursing graduates who want the $7,500 second instalment will necessarily get it.

How would the Victorian government cover student contributions?

Under section 169-15 of the Higher Education Support Act 2003 Commonwealth supported students have to pay the student contribution set. However universities could reduce the student contribution to fit within the $9,000 and recover the balance via a separate contractual arrangement with the Victorian government. I am not sure how they would deal with issues like subjects failed and repeated.

A second possibility might be for the federal minister to make the eligible students exempt from student contributions under section 169-20, with Victoria still compensating the universities. However, this would lose the flexibility of charging students something.

A third possibility would be to give the students cash, and they could decide whether to spend it on student contributions or something else. Federal Labor has said it will repeal the discount for paying student contributions upfront, but with a light parliamentary sitting schedule for the rest of 2022 that might not be done for the commencing class of 2023, saving them/the Victorian government some more money.

Should the scheme be flexible between student contributions and living expenses?

The media quotation mentions ‘HECS fees’, ie student contributions, but is it not clear whether the scholarships will be restricted to them. I would argue in favour of making them flexible.

The evidence that student contributions that can be deferred via HELP affect course choices is weak, but many students report that money and work issues affect their studies. For nursing students there are clinical training components that that can prevent them working in their part-time jobs and for which they must cover their own expenses.

Some extra cash while studying would help nursing students more than paying student contributions that can be deferred anyway. It could reduce hours spent in paid work and increase study load, or decrease the risk that subjects will be failed and have to repeated.

Money for living expenses could help nursing students finish their courses more quickly and get into the nursing workforce at an earlier date.

The focus should be on the supply of nursing places, not demand

If the government wants to increase the nursing workforce demand-side policies are not the most effective. In higher education policy student demand is rarely an issue – it usually follows the labour market, as it has for nursing. The problem is the supply of student places.

Unfortunately the applications statistics report does not provide state-specific nursing applications and offers, but the national figures show that demand already significantly exceeds supply.

In 2021 nursing offers increased by much less than applications. This might reflect bottlenecks in clinical training preventing rapid expansion. But Job-ready Graduates was unfavourable for nursing supply. Total funding per student place was cut by about 8 per cent, reducing the incentive to prioritise nursing. Student contributions were cut by more than 40 per cent, making ‘over-enrolments’ – enrolments funded on student contributions only – a financial risk universities need to avoid.

The Commonwealth government has principal responsibility for the supply-side incentives and capacity for course provision. The main thing states can do is improve arrangements for clinical training.

Conclusion

Overall:

  • This policy will not change the number of commencing nursing students.
  • If it is flexible enough to include cash allowances it may convert nursing students into nurses at a faster rate than current arrangements; if it is restricted to paying student contributions it will have no effect on the supply of nurses.
  • The policy will make the Victorian public sector more attractive than other health providers for nursing graduates, but this may just displace staff shortages around the health sector.
  • Policies that deal with the supply of nursing places, including their clinical training component, are what is required.

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