Why is mature-age university demand trending down?

In 2018, applications from school leavers for university entry were much the same as in 2017. But from non-Year 12 applicants, demand dropped by more than 5 per cent. Full 2018 enrolment data is not yet available, but first-semester domestic commencing undergraduate enrolments fell by 1.8 per cent. Various media reports suggest that demand in 2019 will be lower than in 2018.

As the chart below shows, the largest absolute drop in applications is for people aged 20 to 24, but in percentage terms the older groups dropped at around the same rate. decline by age

Looking at the data on prior education for the non-Year 12 group, application numbers are holding for people with sub-bachelor and vocational qualifications. But the no prior tertiary education and repeat-customer higher education groups are both in decline.

People changing courses or taking another course have long been a significant component of each year’s commencing students, but during the demand driven era they increased from 23.5 per cent in 2008 to 29 per cent in 2016.

Because repeat customers are such a large part of each year’s commencing students, this hid the fact that the number of new-to-higher education students started decreasing in 2015, three years before the total number of commencing students went down.  As with the more recent data, the decline was concentrated in the older age groups, as the chart below shows.Read More »

Is HECS a tax?

My use of the word ‘lent’ in the chart below was disputed on Twitter, on the grounds that payments of HECS or HELP are tax levies. Although not spelled out in the Twitter comment, this point is often more than just a semantic one. It is part of a larger argument about how student/graduate-sourced funding of higher education should work.HELP total debt

One potential system for funding higher education is a graduate tax. The idea here is that graduates pay a proportion of their income above a threshold for a period of time after they complete their degree. With a graduate tax,  higher education is free but extra taxes are paid by financially successful graduates. The revenue could go into general government funds or be set to recover what the government thinks should be the student contribution to total higher education expenditure. But there are no specific charges for subjects or courses and there is no loan. The language of ‘lent’, ‘borrowed’ or ‘debt’ would not make sense conceptually or legally.

Veteran Labor (and current QUT) higher education policy adviser John Byron has argued for thinking about HECS in something like these terms:Read More »

How could Labor make unis increase admission requirements for teaching courses?

At the weekend, Labor announced that it would require universities to increase admission requirements for teaching students. Shadow education minister Tanya Plibersek says that:

“Labor wants the best and brightest Australians studying teaching. If universities don’t do the right thing and fix this themselves, a Labor government will make them.”

But how will a Labor government make them do it? There is no history of the Commonwealth government directly setting entry requirements for university courses. For that reason, there is no specific power in existing higher education legislation to set admission requirements.

This blog post looks at what existing powers could be used to achieve this goal.

Directly targeting lower-ATAR students

The minister can, by legislative instrument, determine that ‘a specified course of study is not one in respect of which students, or students of a specified kind, may be enrolled in units of study as Commonwealth supported students’: section 36-15 of the Higher Education Support Act 2003 (HESA 2003), emphasis added.

The legislative instrument could then specify that students with an ATAR below 80 (the figure nominated by Labor) could not be enrolled as Commonwealth supported students in teacher education. The university would then not get Commonwealth or student contributions for such students.

Such a determination would need to be made at least six months before the start of the course: section 36-15(4), HESA 2003.

In making the determination, the minister must have regard to its effect on students: section 36-15(3), HESA 2003.

A legislative instrument can be disallowed by either house of parliament, which is one potential obstacle to this method.

A determination under section 36-15 lifts the prohibition on full-fee undergraduate students: section 36-30 (1), HESA 2003. If the student is not Commonwealth supported they can only be charged a tuition fee: section 169-15, HESA 2003. This would be awkward for Labor, which came to office last time promising to abolish full-fee undergraduate places.

To ensure that the policy complied with other Labor policies and that universities did not use backdoor methods to by-pass the ban, the minister could also determine that undergraduate teaching courses are not eligible for FEE-HELP: section 104-10(2), HESA 2003. The minister must have regard to the effect on students of making such a determination. The determination can  be disallowed by either house of parliament.Read More »

1996 Cabinet papers: HECS ideas pursued and rejected

This year’s National Archives Cabinet papers release includes material related to the 1996 Budget changes to HECS.

The most important of these were replacing flat HECS rates with ‘differential HECS’, so that rates were based on subject disciplines, and lowering the HECS repayment thresholds, so that debtors began repaying earlier and repaid more at each income level (historical thresholds are at page 47 of this document).

The main submission released today does not have these final decisions, but outlines different views within the government and bureaucracy about how to proceed.

In public statements, differential HECS was justified by reference to both course costs and the expected future income of graduates. Neither Treasury nor Finance were keen on using future income. Finance noted, as others have since, that it varies a lot between graduates. Treasury thought that it was unfair that students in some disciplines would end up paying a much larger share of costs than others.

The idea that students should pay a share of course costs has regularly resurfaced since, most notably in the 2011 base funding review. But in the Cabinet submission we see an early version of why this idea has been consistently rejected. In the draft differential HECS rates based on cost recovery, law ends up in the cheapest band 1 (of 5; there were 3 in the end), while nursing is priced in the middle. Nurses paying more than lawyers is not an easy political sell. In the final announced decision, law was in the highest-priced band and nursing in the lowest-priced band.

The Cabinet submission also has a pricing rationale of expected demand that was not, so far as I know, used in public statements.  If demand already greatly exceeds supply, prospective students are less likely to be price sensitive. But politically that raises the possibility that other students would be price sensitive, which the government wanted to downplay.

Capping access to subsidised higher education to one degree or to a time period was considered; the Fraser government had tried something similar. In the final policy this was sort-of implemented by concentrating funding cuts on postgraduate coursework places. A fuller version of the idea arrived with the 7-year learning entitlement under Brendan Nelson, which started in 2005.  It was later abolished by Labor.

While mainly about course charges, the submission also mentions means-testing access to income-contingent loans by linking it income support thresholds. That would have been the most radical conceptual departure from current policy in the submission if it had been approved. There is also the Department of Finance’s usual attempt to get real interest on student debt, which wins the prize for the most-suggested change to student loans that has never been legislated.

One omission is interesting in light of subsequent policy concerns. Although there is mention of the fact that (by design) not all HECS debt will be repaid, there are no estimates of how significant this is. Perhaps some numbers were in other submissions we have not seen yet, and could explain the big reduction in repayment thresholds.

In 1996 government accounting conventions struggled with income contingent loans, as they still do. The submission mentions which changes will and won’t count towards the politically-salient Budget deficit. Because expected losses from student doubtful debt are not counted in the deficit/fiscal balance, this biases policy towards cutting direct grants to universities, which do count.

Fortunately, however, accounting conventions did let 1996 policymakers see that selling the HECS debt was a bad deal for taxpayers. Another Cabinet submission makes this clear. This possibility was raised again in 2013, with the same eventual conclusion.

As these submissions show, many ideas around HECS/HELP recur repeatedly over time.

 

Ministers should not choose research projects

Senator Kim Carr has been around forever, and knows what questions to ask in Senate Estimates. And yesterday he got the Australian Research Council to reveal that, last year, then education minister Simon Birmingham rejected 11 humanities grant recommendations. So far as we know, this hasn’t happened since Brendan Nelson was minister in the middle of the last decade (Gideon Haigh tells that story well).

As with the Nelson intervention, Birmingham’s decision has prompted outrage. The Australian Academy of the Humanities says that “this interference is entirely at odds with a nation that prides itself on free and open critical enquiry.”

Birmingham’s response is, in effect, that the rejected projects are not worth funding. On Twitter, he says “I‘m pretty sure most Australian taxpayers preferred their funding to be used for research other than spending $223,000 on projects like ‘Post orientalist arts of the Strait of Gibraltar.'”

He could have picked several other examples: “beauty and ugliness as persuasive tools in changing China’s gender norms”, “music, heritage and cultural justice in the post-industrial legacy city” or “Soviet cinema in Hollywood before the blacklist, 1917-1950”.

But that Australian taxpayers were probably not going to get value for money from these very niche projects is not the same as an argument for rejecting an ARC recommendation. Read More »

When can domestic undergraduates be charged full fees?

This post is not related to any current policy issue. It is a summary created for another reason but might be useful for higher education administrators or policy people.

‘Full fees’ is a term used in Australia as an implied contrast with students who pay a student contribution, which is usually combined with a Commonwealth contribution to provide an overall funding rate for a Commonwealth supported student. ‘Full’ means that there is no government subsidy and the student pays all the provider charges. Tuition fees for non-Commonwealth supported students are not regulated. There is more detail on this in chapter 7 of Mapping Australian higher education 2018.

About 7 per cent of domestic undergraduates in Australia are full-fee paying. The simple explanation for this is that domestic undergraduate students in public universities pay student contributions rather than full fees, while undergraduates in private universities and non-university higher education providers pay full fees. However, there are exceptions in both cases, sometimes at the unit of study (subject) level rather than the course.

In what follows, all statutory references are to the Higher Education Support Act 2003.

Generally, domestic undergraduates enrolled in a Table A university (more commonly known as a public university) must be enrolled as a Commonwealth supported student: section 36-30 (1). This creates an on-going entitlement for that course, unless one of the exceptions below becomes relevant: section 36-25(1).

Once a student is a Commonwealth supported student, he or she can be charged a student contribution but cannot be charged another tuition fee: section 169-15(1).

A domestic student is an Australian citizen, a New Zealand citizen, a permanent visa holder or a permanent humanitarian visa holder: Schedule 1, Dictionary.

But there are exceptions to the general entitlement of public university students to Commonwealth support:Read More »

Many graduates will repay less per year, and maybe less in total, under the new HELP thresholds

The Government had a rare higher education Senate victory this week, passing various amendments to the HELP loan scheme.

These include a series of changes to HELP repayment thresholds. Most of the political attention went to the initial repayment threshold, below which no repayment is required. It will drop from the current $52,000 to just under $46,000 in 2019-20. At that point, debtors will have to repay 1 per cent of their entire income.

In principle, I support this step in the direction of better aligning HELP with other government income support thresholds. This 2016 Grattan report supported a lower initial threshold.

Unfortunately, another key recommendation of that report, of consistent percentage increases between each threshold at which the repayment rate increases, was not strictly followed.

For most of the higher thresholds, each is 6 per cent higher than the one before it. But there is a 15 per cent gap between the first and second thresholds.

Combined with starting the repayment percentage at just 1 per cent,  this radically changes the nature of the threshold reform. It is not now something that we can assume will significantly alter HELP doubtful debt.

One intention of the original Grattan proposal was to move debtors more quickly through the repayment rates.  This was partly to recover more HELP debt before female full-time labour force participation drops from their late 20s, as shown in chart 1 below.

Chart 1: Female bachelor degree graduate labour force status, 2016

female labour

Read More »