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 »
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 »
Last week I published a blog post on the financial dangers posed by the COVID-19 crisis starting prior to the census date for each subject. It is a critical date for universities. They get no Commonwealth or student contributions for subjects dropped prior to the census date.
As Stephen Matchett reported in Campus Morning Mail yesterday, social media talk about dropping subjects is still at high levels. One of the reasons, that unemployment income support benefits would be more generous than student benefits, seems to have been fixed in Parliament yesterday. Although I think students are better off finishing their course on schedule if they can, we should expect higher drop-outs than usual prior to the census date.
I am also hearing reports of international students heading home before the census date because of family pressure. They might also leave because they can no longer support themselves due to the collapse of the student labour market. Due to an extraordinary new power to widen social security eligibility some international students might temporarily receive benefits, but I think entitlements are too unclear to change short-term behaviour.
If these drop-outs are happening at any scale then, except for the universities on trimesters that are already past their first census date, then serious higher education financial problems are very close, as universities will have to scale back their expected Commonwealth-supported student revenue and international student fee income for the year.Read More »
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 »
On Facebook I have seen undergraduate petitions calling for university classes to be suspended. One person claimed that their institution was stalling until after the census date. This is the day when students became liable to pay their student contributions and the university becomes entitled to receive Commonwealth contributions, their government tuition subsidy.
In the Grattan report on dropping out I co-wrote a couple of years ago, we argued that the census date is an interesting and unusual feature of Australia’s higher education system. Effectively, it gives students a free try-before-you-buy option for every subject they take.
By law this period is at least 20 per cent of the semester, but on our analysis the median period before the census date was a quarter of the semester. Four weeks is common, with a census date at the end of March for first semester (earlier for universities with trimester systems).
In the other English-speaking countries we looked at students usually only have one to two weeks to change their minds without financial cost.
The late Australian date for dropping subjects or courses without cost transfers some enrolment risk from students to universities, who end up teaching students who never generate any revenue. Overall I think that is a good thing, as it creates pro-student incentives that would otherwise be lacking.Read More »
University finances have been in the news this year. As the travel ban on Chinese students was announced some very big financial costs were estimated – since moderated due to the third-country quarantine exception, but still estimated to be well over $1 billion, at least in temporary cash flow issues.
In worst-case COVID-19 scenarios there would be travel bans from many international student source countries, along with campus closures that could require refunds or compensating classes for affected domestic and international students.
While I doubt the worst-case scenario will become reality, the ‘rivers of gold’ era (as Simon Birmingham once described it) for university revenue is over.
Even before COVID-19 international student demand seemed to be softening, while remaining high by historical standards.
On top of this, all public universities are dealing with a decline in the real value of their bachelor-degree student funding, and some are struggling to maintain domestic student numbers due to soft demand.
Cutbacks have been reported at many universities including Wollongong, La Trobe, Sydney, Macquarie, Monash, and in the last day the University of Tasmania.
Fortunately, the universities that are most exposed to the China market are relatively wealthy. They should be able to deal with short-term liquidity issues from a mix of reduced and delayed spending, drawing on reserves and perhaps bank borrowing. But what if a university faces more serious difficulties?Read More »
Last week the Department of Education issued a report on equity students enrolled in research higher degree programs. As those who have read my work over the years know, I think we have significant conceptual and empirical problems in measuring socioeconomic status in higher education. And these are even more significant for higher degree students than they are for undergraduates.
What this means is that even though the report’s overall conclusion, that high SES students are ‘over-represented’ in research degrees, must be true based on other empirical evidence and theory, its statement that ‘this data should … be used with caution’ is a warning that should be heeded.
Problem One: We are only using a geographic proxy indicator for SES, the ABS Index of Education and Occupation. A person is classified as low SES if they live in an area in which the population has relatively low levels of education and relatively high levels of people who are unemployed or work in lower-skill occupations. But people with high levels of education and with high skill jobs live in otherwise low SES areas, and vice-versa.
Problem Two: We define as low SES people living in the lowest 25 per cent of areas by the Index of Education and Occupation. That is too small a share – the next quartile up is sociologically similar.
Problem Three: For research students, are we interested in their current socioeconomic status or their background? Regardless of their background, if they already have a degree (which they almost certainly do if they are in a research degree) and work in a professional job, as is quite likely to to be the case, then they are not going to be classed as low SES by the standard bureaucratic measures. And if they have moved to study and/or to be closer to professional job markets, then they will probably live in high SES areas.Read More »