Should students lose Commonwealth support for failing too many subjects?

My previous post explained various measures proposed in new government legislation to reduce how many students fail subjects. These include restrictions on marketing to students who may not be serious, a new Departmental power to not pay universities for subjects if the student is deemed not ‘genuine’, a requirement that universities refund student contributions or fees where the student is not genuine, a new obligation to check the student’s academic suitability at the subject as well as the course level, and restrictions on students taking more subjects in a year than they can manage.

Most of yesterday’s media attention, however, focused on a different part of the legislation, restricting Commonwealth Grant Scheme and HELP entitlements for students who fail too many subjects.

In explaining this change I am, as with the previous post, going to cite legislative provisions to help people who are working on providing feedback on the bill. HESA 2003 means the Higher Education Support Act 2003. As before, please feel free to point out errors or alternative interpretations in comments or via email.

General rule – failing more than half of subjects leads to loss of funding entitlements

The general rule is that students who fail more than half their subjects in a course will lose their entitlement to Commonwealth support: new section 36-13 of HESA 2003 for Commonwealth supported students, for FEE-HELP students existing section 104-1A activated by schedule 5 part 2 of the draft legislation. At public universities, FEE-HELP borrowers are mainly postgraduates, as they cannot offer undergraduate full-fee places except in narrow circumstances.

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Checking that students are on track to pass – the government’s proposal

My previous post argued that some university students needlessly incur HELP debts and fails on their academic record. This post looks in more detail at several measures proposed in new legislation to alleviate this problem.

Although these measures arrived without warning they have a history. With some amendment and addition, they extend to public universities rules applying to non-university higher education institutions since the 2017 provider integrity legislation. In turn the 2017 non-university provider legislation imported vocational sector rules intended to avoid a repeat of the VET-FEE HELP debacle.

Provider marketing and student motivations

The issues in VET FEE-HELP and higher education are, however, quite different. The offering of inducements, misleading statements about HELP, and cold calling that would be restricted or banned for public universities by the new legislation never or rarely happen in higher education.*

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Disengaged and failing students are an issue worth policy attention

The draft legislation for the Tehan higher education package, released on Tuesday, includes several previously unannounced measures. These include new – or least new for public universities – rules for managing under-performing students.

Among the measures are greater monitoring of student progress, restrictions on study load, and as the media has been reporting today students losing Commonwealth funding if they fail more than half the subjects they have taken. The minister’s media release is here.

I will get to the sometimes arcane detail in a subsequent post (or posts, there is a lot). I am not convinced that the government is going about this in the best way. But I don’t want complaints about the details to obscure the point that this is an area worth policy attention.

In the Grattan Institute Dropping Out report we argued that disengaged students are needlessly incurring HELP debt and blemished academic records. With demand likely to exceed supply for higher education next year, disengaged students are also using Commonwealth supported places that would benefit other people more.

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Are early offers turning into a problem?

A wide variety of universities have early offer programs for 2021. These have been the subject several recent newspaper articles, especially on early offers to Year 12 students.

Letting students apply for university courses and receive offers prior to the main selection process after Year 12 results isn’t new. Andrew Harvey documented many examples in 2014.

But the anxiety many Year 12 students feel about a disrupted final year of school, and their very uncertain prospects, might fuel greater interest than usual in locking in at least one part of their future.

While Year 12 students seeking an early offer is very understandable, as a university practice early offers now raise issues they did not previously.

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The first COVID-19 higher education support package – a revised, less speculative post

The government now has a first support plan for higher education. Its key elements are letting universities keep student-related grants and loans for 2020 even if they enrol too few students, funding short courses, and regulatory fee relief.

An earlier post was my inference and guesswork from fragmentary Easter Sunday announcements. This post uses material from FAQs issued by the Department of Education on Tuesday.  For readers who do not need to be across the technical detail of higher education funding I recommend my article for The Conversation rather than this post.

Commonwealth Grant Scheme

The government’s biggest higher education funding program is the Commonwealth Grant Scheme, which pays tuition subsidies of over $7 billion a year. Under the Higher Education Support Act 2003 total payments for the year cannot exceed equivalent full-time student numbers multiplied by the relevant Commonwealth contribution.

Universities are paid fortnightly based on estimates of their CGS entitlement for the year. A few days ago the University of Sydney announced that it was down 5 per cent on its domestic student target. Whether this is due to COVID-19 or tough NSW market conditions is not clear. A number of other universities were struggling before COVID-19 due to demographic factors.

Whatever the reason, universities will now be paid their original estimated funding rather than their legal entitlement. This also suspends the need to meet performance funding criteria, which is sensible. Read More »

Predicting student numbers during the COVID-19 recession: 2021 could be an unexpected peak year

In two recent posts, I argued that although higher education demand increased during the early 1990s recession, this may not happen on the same scale during the COVID-19 recession. We start this time from a much higher base of educational participation and attainment. The pool of people interested in higher education, but who have not yet enrolled or acquired a degree, is smaller than it was 30 years ago.

However, to predict that total applications may not increase very much is not the same as saying that total short-term demand will not increase substantially. Applications will be a weaker proxy than usual for how many people will want to be enrolled.Read More »

Will the COVID-19 recession increase mature-age applications for higher education?

In an earlier post, I looked at how the COVID-19 recession might affect school-leaver applications for undergraduate education. I concluded that although the lack of job opportunities would favour continued education over unemployment, the scope for applications growth was lower now than during the early 1990s recession.

School retention is much higher now than 30 years ago, and a much larger proportion of the cohort with a potential interest in university already attends. With the age cohort’s size not changing much in the short term there is less room to move.

Interpreting historical application numbers from older university applicants is complicated. It includes relatively young people, did not until the last decade count direct applications to universities (which are mostly from older applicants), and does not distinguish between applicants who are already students but hoping to change courses and those seeking to enter higher education.

With these caveats, the chart below shows a large increase in applications from non-school leavers in the early 1990s. In percentage terms it is larger than the school leaver increase. It is consistent with the recessions drive up higher education demand hypothesis. The scope for growth is high because it is not constrained by the size of recent Year 12 classes.Read More »

Will the COVID-19 recession increase school-leaver applications for higher education?

Due to COVID-19 Australia faces the worst recession in living memory. This post is the first of a series looking at how this might influence demand for higher education. But to pre-empt future posts, applications are just one of several factors affecting how many students end up enrolled. Acceptance rates, deferrals, and attrition rates could all change, affecting student numbers.

I will start with the school leaver market. As I have noted previously, in recent years higher education applicant numbers have softened. For school leavers, demography will continue to cap numbers. But within the constraints of age cohort size, could the recession affect applicant numbers?

Recessions change the economics of choosing between higher education and work. If there are no jobs a university student does not forgo pay and work experience. Higher education’s opportunity cost falls. Further study might be the second-best option, but it is better than unemployment.Read More »

Is declining higher education demand a concern?

In the last couple of years demand for higher education has trended down, with enrolments falling slightly in 2018 compared to 2017. This post explores some reasons why this might be happening.

Demographic trends are always important to enrolments and participation rates.  Unfortunately no data source tells us in total or by age how many people meet the eligibility criteria for a Commonwealth-supported place.

The size of the birth cohort has a significant influence, but under-counts eligible persons due to migration. With 22 per cent of domestic students born overseas migration is important to demand. ABS demographic data includes migrants, but because of long-term temporary residents over-states how many people are eligible for a CSP.

As universities generally require students to have completed Year 12, final year of school enrolments are also a guide to potential demand. However, this is also an imperfect indicator, due to temporary migrants and not all Year 12 students taking subjects that qualify them for university entry.

With all these caveats, the chart below shows that none of the potential population indicators suggest that, holding participation rates constant, that demand for higher education should be up in aggregate terms. The (temporarily) falling size of the birth cohort and the slight dip in Year 12 students would suggest that demand might trend down.

potential uni students

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Has the university funding freeze caused commencing enrolments to fall?

The 2018 higher education enrolment data, published yesterday (yes, it should be released much earlier than late October), showed a rare fall in public university domestic commencing bachelor degree students. Both a headcount and full-time equivalent count show a decline of about 0.8 per cent compared to 2017.

2018 was also the first year post the demand driven system, the practical implication of which was that universities would not be paid Commonwealth contributions for enrolling additional students. Indeed, there is a financial incentive to let the number of student places fall.

So is this cause and effect, with changed funding rules causing enrolments to decline? I have no special insight into the strategic decisions of universities, but overall this trend looks to be driven by weak demand more than an unwillingness to supply student places.

As the chart below shows, applications trended down in 2018 and 2019 and offers (willingness to supply) followed this trend. Offer rates were stable: 83.2 per cent in 2017, 83.8 per cent in 2018, and 83.6 per cent in 2019. If universities were actively trying to reduce numbers we might expect offer rates to go down, but this isn’t happening.

applications down 2019

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