Financial influences on job-seeking university applicants

In an earlier post, I argued that student interests drive course choices, but also that more than 80 per cent of first-year students hope for improved employment outcomes.

It follows from this that, within their cluster of interests, prospective students would plausibly choose courses with the best apparent employment and income outcomes.

This theory helps explain trends seen in applications data. While supply-side and timing problems mean we do not always have enough ‘job-ready graduates’, rarely do we lack ‘job-ready applicants’.

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Could the proposed student contributions influence permanent residents and NZ citizens?

In saying that I expect price sensitivity to be low in response to changed student contributions, I have given the HELP loan scheme as one of my reasons. Study now, repay later, perhaps never.

But I should caveat that, because not all Commonwealth supported students are entitled to a HELP loan. HELP is a rare social support scheme that is linked to citizenship; it could be the only one (happy to hear of others, if anyone knows of them). The only general exception is permanent humanitarian visa holders.

Entitlement to a Commonwealth supported place is more conventional. Permanent residents can have one. Indeed, for people with PR their tuition subsidy entitlements are more liberal than for other programs. Unless someone was an international student when starting their course, their eligibility for a CSP begins immediately on attaining permanent residence, while there is a waiting period for many social security benefits.

The benefit for a CSP for someone with PR is limited to the Commonwealth contribution and the price cap on student contributions.

But this means that any student contributions have to be paid upfront. In 2018 about 38,000 domestic students were permanent residents, or 3.5 per cent of the total.

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The Tehan discipline funding rates are probably better than they look

Update 3/7/2020: I now believe that, contrary to what this post suggests below, that at least the amended chart is based on ‘true average’ figures.


On Twitter the new funding rates in the Tehan higher education reform package are being criticised for not covering costs in most fields. That’s a completely understandable concern, given that the government’s own discussion paper suggests that this will the case, by publishing the chart below.

Fortunately for universities, if this package makes it through the Senate, I think there is a mistake in the chart’s figures. I noticed this because I initially made the same mistake myself when analysing the underlying cost figures for this blog post last month. (Update 24/6: The latest version of the discussion paper has a lower overall average cost than the chart above.)

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What would the public-private funding split be if the Tehan reforms are implemented?

What I think are transposed numbers on the public-private division of Commonwealth-supported student funding are entering mainstream media.

Unless the enrolment outcome is very different from what the government and its critics both expect, and there is a boom in humanities, business and law enrolments, then we will not cross over into a majority student funded system of Commonwealth supported places.

If enrolments had the same distribution between disciplines as in 2018, then the system would move from 42 per cent student funded to 48 per cent, as seen in the chart below.

Jobs, interests and student course choices

The Tehan higher education reforms aim for ‘job ready graduates’. In that, the government’s goals align with those of most students. In recent ABS surveys asking students about their main reason for study, more than 80 per cent of bachelor-degree respondents gave a job-related reason. About 10 per cent gave interest or enjoyment as their main reason (chart below).

However, interest and work reasons are not mutually exclusive. When multiple reasons can be given interest in the field of study is the most popular answer, with over 90 per cent of respondents saying it is important (chart below). Training for a specific job is nominated by about three-quarters of respondents, with another ten per cent hoping to improve their job prospects without having a precise occupation in mind.

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Why did universities become reliant on international students? Part 5: The rise of research rankings

In my series of posts on why universities became financially reliant on international students I have, to date, focused on domestic factors. Research funding policy changes are the most important. Universities needed new discretionary revenue to finance government-supported research projects, and to pay the salaries of staff with teaching and research roles.

But universities did not need a nearly 500 per cent real increase in international student fee revenue since 2000 to fill these budgetary gaps.

Suppose annual Commonwealth research spending was 50 per higher across the last few decades, all of it paid through block grants rather than generating additional costs via competitive grants. Up until the year 2000, as the chart below shows, a 50 per cent increase in public funding would have covered all research spending. But in 2018 Commonwealth funding 50 per cent higher than it was would still have left over 40 per cent of research spending unfunded (although there is about $1.9 billion in non-Commonwealth research income).

Profits on international students have been used to help finance a massive increase in university research expenditure this century.* Growth on this scale was something universities chose to do, not a change forced on them by government policy.

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Australia’s university research boom

Last weekend I posted some concerns about whether ABS research expenditure figures were over-estimates. They may attribute a higher proportion of academic working hours to research than a proper time-use study would show, and therefore put a too-high share of academic salaries into the ‘research expenditure’ column.

On the other hand, research output evidence is consistent with the 21st century research boom suggested by the ABS figures. The number of academic journal articles with at least one Australian author increased dramatically, as seen in the chart below.

Although missing the 1990s comparison, journal article volume data collected as part of the Excellence in Research for Australia exercise shows the same very large upward trend.

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Reality testing teaching and research cost results

My recent blog post on the cost of the teaching-research academic employment model prompted various Twitter comments on its analytical assumptions.

Friday’s post and the comments made on them also link back to other recent posts that try to understand how universities finance themselves. The posts have consistently acknowledged data issues, and that precise dollar figures cannot be attached to most of the conclusions. At best, we can get to a credible range.

The most important criticism is that my analysis assumes that the two main sources of university expenditure data, the Deloitte Access Economics study for teaching, and the ABS for research, can adequately distinguish between and separately cost scholarship and research.

According to the ABS, which uses international definitions, research is ‘creative and systematic work undertaken in order to increase the stock of knowledge – including knowledge of humankind, culture and society – and to devise new applications of available knowledge’. Scholarship, by contrast, I take as activity leading to or maintaining in-depth understanding of existing knowledge.

It is hard to have research without scholarship. How can academics claim to have increased knowledge if they are unaware of the current state of their topic or field? The literature reviews that appear in many ‘research’ articles in academic journals are scholarship.

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Why did universities become reliant on international students? Part 4: Trying to maintain a teaching-research academic workforce

In my previous post in this series, I argued that international student fees help pay for under-funded government-sponsored research grants. But these research projects are not the only partially-funded research universities are trying to finance. They also have many teaching staff on contracts that include research time, but who do not attract equivalent research income.

For academics, the expected and preferred academic career is generally to have a teaching and research or research only role. For most academics, however, teaching is not their top priority. A survey about a decade ago found that, among teaching-research academics, nearly two-thirds leaned towards or were primarily interested in research.

This bias is reinforced by the academic recruitment process, which favours people with PhDs. In 1987 less than a quarter of academics in the Colleges of Advanced Education, which by then taught the majority of higher education students, had PhDs, and 69 per cent of university academics. In 2018, across the now unified system, nearly 74 per cent of academics have a PhD.

Not surprisingly, most people who do PhDs are interested in research. In a 2010 survey, only six per cent of research students planning an academic career nominated a ‘mainly teaching’ role as their ideal job.

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Why did universities become reliant on international students? Part 3: The rise of research project grants

In a previous post, I doubted that inadequate public funding for Commonwealth supported students could, with a few exceptions, explain why universities have enrolled so many fee-paying international students. For publicly-funded research, however, structural changes in how funding is delivered have changed its economics.

Government policy has moved away from block grant funding – lump sums of money that universities can spend as they choose – towards project funding awarded on a competitive basis, mainly through the Australian Research Council and the National Health and Medical Research Council.

In the 1990s, as the chart below shows, competitive grants made up less than a quarter of Commonwealth research spending on universities (counting Department of Education plus NHMRC). By the middle of the 2010s nearly half of Commonwealth funding was delivered through competitive grants, though with an easing off recently as ARC funding was cut.

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