A few notes on the future of higher education policy

Labor went to the 2022 election with few specific policies on higher education, but with general plans for a different style of policymaking. The teal MPs have a few things to say about higher education. If Labor gets a clear House of Representatives majority, however, the opinions of the yet-to-be-determined Senate crossbench will be more important than those of lower-house teals in the passage of higher education legislation.

Additional student places

Labor’s main specific election promise was ‘up to’ 20,000 more student places. As I wrote when the policy was announced, the ‘up to’ is an important caveat, because under Job-ready Graduates the government allocates dollars rather than places. The same number of dollars can convert into lots of places in arts or business courses with low Commonwealth contributions, or relatively few places in courses with high Commonwealth contributions.

Labor’s costings document also indicates that this money for extra places appears to be temporary, starting to decline before the full impact of demand from the ‘Costello baby boom’ cohort is felt. It may also be too little to offset the inflation impact on Commonwealth-supported places. Commonwealth contributions are indexed to CPI, so as contribution values go up universities need to deliver fewer student places to get each $1 million of Commonwealth Grant Scheme funding.

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Further restrictions on the political freedoms of international students and other temporary migrants

Despite a COVID-driven dip to 1.6 million, Australia remains a country with high numbers of long-term migrants without the rights that come with permanent residence or citizenship. In many areas of public policy we are struggling, often unsuccessfully in my opinion, to deal with the social and political implications of this population, of which international students are the second largest category after New Zealanders.

A recent article in The Conversation by election law expert Graeme Orr drew my attention to a further example of unjustifiable, and in his view potentially unconstitutional, treatment of temporary migrants. For some years now the government has been preoccupied with ‘foreign’ (ie Chinese) influence. One response has been stripping temporary migrants of political rights.

Three years ago I wrote a post criticising restrictions on temporary migrants being able to make political donations. Legislation passed this week takes these restrictions much further, covering other kinds of political expenditure and activity.

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Patterns of international student enrolment decline in the first year of COVID-19

For international students the 2020 higher education enrolment data released this week is already very out-of-date. The international branch of DESE produces more current aggregate numbers, and has been circulating up-to-date figures to experts and stakeholders. Peter Hurley used these in a recent Conversation article. It’s a model for what, after a recent IT upgrade, could and should be done for domestic enrolments (my long-after-the-fact analysis of the 2020 domestic results is here).

Although more recent current total international enrolment figures are available, a few things in the recently released 2020 enrolment data tell us more than is publicly available elsewhere.

Attrition

International bachelor degree students have much lower attrition rates after first year than their domestic counterparts. Flying to a foreign country and paying sometimes exorbitant fees is a strong incentive to get the degree. But while attrition for 2019 commencers into 2020 declined for domestic students, the international rate increased nearly 3 percentage points to 12.73 per cent. The most likely reason is that some international students could not get back to Australia due to travel bans.


Commencing and continuing students

Increased attrition meant fewer continuing students than would have been the case without COVID-19. But the prior boom years for commencing students meant that continuing students still increased in 2020 on 2019 figures. This is one reason why the overall decline in international students was contained to 6.6 per cent, despite an 18.2 per cent decrease in commencing numbers.

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Domestic student enrolment increases in the first year of COVID-19

The 2020 higher education student data has finally been released, giving us the first detailed look at potential COVID-19 influences on enrolments. This post is on domestic students. Another post examines international students.

Aggregate trends

Overall domestic student trends were positive for both undergraduates, up 2 per cent after a decline between 2018 and 2019, and postgraduate coursework, up 14 per cent after six years of stagnation or low growth. Postgraduate research was an exception, down by 577 enrolments or 1.3 per cent. Including enabling and non-award students total domestic enrolments were 1,133,519, 4.4 per cent up on 2019.*

Student ‘load’ – full-time equivalent enrolments – was up by less, 2.6 per cent. The headcount share of part-time students, defined as less than 75 per cent of a full-time equivalent study load, is only up by .7 of a percentage point, suggesting more part-time students with light study loads and/or more full-time students not at a 100 per cent study load.

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University job losses in the first year of COVID-19

Long overdue data on university staff in 2021 was released yesterday, giving us the most detailed information yet about job losses since COVID-19 hit the higher education sector.

Aggregate losses

The Department of Education’s staff statistics are mostly based on a 31 March census date. For staff with permanent or fixed term contracts I assume few job losses before 31 March 2020. The full travel ban on incoming international students was less than two weeks old, although some countries – including, importantly, China – had earlier travel restrictions. But retrenchments take time to process so I doubt the impact at 31 March exceeded some new hires abandoned at the last minute. These weren’t enough to prevent a 3.7 per cent headcount increase between 2019 and 2020.

In the next twelve months to 31 March 2021 total permanent or fixed term contract staff fell by 9,050, or 6.9 per cent of the 31 March 2020 total. This is only the third decline in staff numbers since 1989, and by far the largest. Difficult as 2020 was for everyone involved, total staff numbers at 31 March 2021 (121,364) were roughly what they had been on 31 March 2018 (121,718). The higher education sector is still a big employer by its own recent historical standards.

The full-time equivalent fall for permanent or fixed term contract staff was 7,985, or 6.8 per cent. This number, however, needs a caveat. For these staff the FTE is an extrapolation based on work arrangements as at 31 March. Normally this would understate actual FTE, as hours worked by additional staff hired after 31 March will not be counted until the following year. But in 2020 the 31 March estimate would have overstated FTE, by not taking into account net staff reductions during the rest of the year.

For casuals DESE reports actual FTE (ie not an extrapolation) with a lag, so that 2021 actuals will be reported in the next staff data release. Before then DESE publishes university estimates of casual FTEs. With no notice periods or retrenchment payouts required, universities could start reducing casual numbers before 31 March 2020. As the chart below shows, casual estimates were trending down at 31 March 2020 compared to 2019 – a contrast to the increase in permanent and fixed term staff.

The actuals show an even bigger decline, with losses of 4,258 FTE or 17.5 per cent in 2020 compared to 2019 .

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University offers under Job-ready Graduates

In an earlier post I looked at how university applicants responded to COVID-19 and the new Job-ready Graduates student contributions. In this post I look at how universities responded, based on the offers statistics released yesterday. All the numbers are for domestic undergraduate applicants only.

The incentives faced by universities

In the lead up to 2021 university offers university leaders made various statements about trying to meet expected extra domestic demand, as COVID cut job and travel alternatives to study. But universities also faced, and face, a difficult finanacial situation. They are simultaneously being hit by the Job-ready Graduates policy, which reduces their per student funding in many fields, and by the loss of international student revenue, with the borders now closed to new international students since March 2020. These events compromise university capacity to fund domestic undergraduate student places that do not cover their own costs

Capacity aside, Job-ready Graduates creates complex incentives. By funding at average teaching costs it creates an economies of scale model. That’s one reason why we see the closure of low enrolment subjects and courses. If there is no longer any profit on some courses that may also disincline universities from expanding. On the other hand, if universities want to maintain a course then driving up enrolments may the key to it, by spreading fixed or semi-fixed costs over larger numbers of students. And in the $14,500 student contribution fields – arts (with a few exceptions), business and law – there may be a de facto demand driven system.

Universities also need to consider a complex short-to-medium term negative effect caused by JRG only partially grandfathering pre-2021 students. The link has explanatory detail, but the practical consequence is that more of a university’s total Commonwealth teaching grant has to be spent on continuing students, leaving less money for new students.

Yet another complexity for universities is that COVID-19 made estimating student numbers more difficult. For admissions, the key risk was that offer acceptance rates would be higher than usual, and the university would end up with loss making ‘over-enrolments’ (enrolments that earn a student but not a Commonwealth contribution). This created an incentive to be cautious about offer levels.

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The first Job-ready Graduates university applications data

The 2021 university applications data is out today, of more interest than usual due to two big events, COVID-19 and the Job-ready Graduates policy changes.

Early in the pandemic I thought there might be a moderate increase in school leaver applications and a larger one for mature age students. The primary reason in each case was the counter-cyclical aspect of higher education demand, with some people studying when work is hard to find.

On top of this, under Job-ready Graduates the government introduced significant changes to student contributions, so that some courses cost 2021 commencing students much more than those who commenced in previous years, while other courses cost less.

Total applications

The trend in total domestic application numbers is complicated by a change to the Queensland school starting age in 2007, which produced a dip in Year 12 numbers in 2019 with negative consequences for university applications for 2020 and a rebound in 2021. DESE has produced trend lines with and without QTAC figures to account for this issue, with the non-QTAC figures producing an increase of 2.3 per cent between 2020 and 2021 (4.4 per cent with QTAC). It’s not super-fast growth, but the 2.3 per cent is the highest since 2015.

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Student employment is at record levels, but can it last?

In March 2020, as Australians realised that COVID was a major problem, I wrote a pessimistic post about student employment. For a while during 2020 that pessimism was justified. But not in 2021. Tertiary student employment is at an all-time high, driven by more jobs and less labour market competition.

Retrenchment

For the ABS Participation, Job Search and Mobility survey the sample is full-time students who have completed Year 12 but have no post-school qualifications. For this group retrenchments were high in 2020. Of the people who were students in February 2021, and had been employed in February 2020, 6.5 per cent had been retrenched over the previous 12 months. This compares to retrenchment rates of about 2 per cent a year in the 2016-2020 period.

The ABS monthly and quarterly labour market reports do not include retrenchments by student status, but do provide a time series for 15-24 year old workers. About 24 per cent of those workers were full-time tertiary students in 2020. As the chart below shows, retrenchments for 15-24 year olds spiked in the May and August quarters. In the May 2020 quarter they were 31 per cent of all retrenchments. JobKeeper slowed overall job losses from the end of March, but this demographic is relatively high on people not meeting its personal eligibility criteria. Temporary migrants such as an international students were not included in JobKeeper and casuals needed to have been in their job for 12 months.

Employment to population ratio

The main analysis supported by the labour force statistics is full-time tertiary students aged 15-24 years. The chart below shows that just between March and April 2020 the proportion of tertiary students in employment fell significantly, down nearly 9 percentage points. Student employment levels were already coming off their summer peak, with employment rates declining from 65 per cent in December 2019 to 46 per cent in May 2020.

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What can the government do about student associations and free speech?

The Australian this morning reports that ‘Education Minister Alan Tudge is considering cutting off funding to student organisations that ­attempt to stop the airing of views they oppose on campus.’ The trigger is an issue with the ANU student association, and whether an anti-abortion group and the ADF should be able to set up stalls at the association’s market day.

As is usual in these cases, the facts are not entirely clear. The student newspaper Woroni quotes the student association’s social officer as saying the groups were excluded. But the association told The Australian that the groups did not apply and therefore no application from them has been rejected.

Either way, ‘Mr Tudge told The Australian he was considering ways to block student unions that impede free speech from taking compulsory student fees which fund their services on campus, and tying them to a model code of free speech that now applies only to university administrators and staff.’

How can student unions be regulated?

As the minister’s statement acknowledges, if a student union is a separate legal entity to the university it is not automatically covered by the academic freedom and freedom of speech definitions added to the Higher Education Support Act 2003 earlier this year. The government may try to extend freedom of speech provisions to student unions.

The current freedom of speech law is based on applying conditions to grants rather than direct regulation. As student unions don’t receive grants this mechanism cannot be used for them.

While the government does not directly fund student associations, this year the Commonwealth has lent students about $130 million through the SA-HELP scheme to pay their amenities fees.

There is no current power to attach additional conditions to SA-HELP loans, but this could be considered.

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How much the government paid for Centre Alliance’s Senate vote, and other updates from the funding agreements

This post updates one I wrote in April, including new information from revised university funding agreements posted on DESE’s website.

South Australian university Senate special deals

The updated funding agreements let us see how much the government paid to get Centre Alliance Senator Stirling Griff to vote for Job-ready Graduates, which is $68.6 million for South Australian universities over the 2021-2023 funding agreement period. Unlike much of the other additional money in the funding agreements, these increases are ongoing rather than temporary.

I am not sure what criteria were used in dividing the money between the South Australian universities. In 2021 Adelaide gets 1.9 per cent more than it presumably would have otherwise, Flinders 2.7 per cent, and the University of South Australia 3.1 per cent.

More short course places allocated

In my earlier post the allocated short courses fell short of the announced budget value of $252 million. Now they slightly exceed it at $258.7 million, divided between 256 undergraduate certificates valued at $102.9 million and 491 graduate certificates worth $155.8 million. My updated spreadsheet of short courses is here.

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