The ATO’s annual taxation statistics release shows that in 2019-20 the number of repaying HELP debtors continued its strong growth, up 23 per cent on 2018-19 and exceeding 1 million for the first time. However, compulsory repayments are not growing as strongly, up 8 per cent on 2018-19 to $3.6 billion.
This post offers a few explanations for overall growth and why repayers are increasing more rapidly than repayments.
The return of inflation has led to questions about what this means for students, graduates and higher education institutions. This post lists some of the implications.
Indexation of HELP debt
HELP debt is indexed each 1 June. It is based on a two year period of CPI data ending in the March quarter of 2022 (I am not sure why it is two years). Because inflation March 2020 to March 2021 was lower than inflation March 2021 to March 2022 indexation for 2022 was 3.9 per cent, rather than the 5.1 per cent it would have been on a one year CPI cycle. The downside of this reprieve is that after inflation comes down again indexation will still exceed the recent average.
I said at last week’s Universities Australia conference that increased indexation will affect the politics of HELP debt. The big increase in the number of HELP debtors and total HELP debt over the last 15 years occurred at a time of mostly low inflation. Annual indexation rarely attracted much comment. This year there was much more media and social media coverage.
CPI is well above bank interest rates, giving people who can afford to repay early an incentive to do so. Indeed, low bank interest rates may help explain why voluntary HELP repayments have grown in recent years.
Read More »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.
Read More »The Commonwealth Budget has triggered confusion about higher education funding. How much does the government spend? Has there been a cut or not?
The Budget documents understate government higher education expenditure
The only summary statement of higher education expenditure in the Budget documents is in Budget Paper No. 1, which reports spending on the higher education ‘sub-function’ (sub- of education generally).
But what is in the higher education sub-function? I’ve collated as much information as I can from the Budget papers and I think it means grants administered under the Higher Education Support Act 2003. I can’t exactly replicate it but my numbers are very close – slightly less in every year. I lack expenditure on the Indigenous Student Success Program, which HESA 2003 funds but PM&C rather than DESE administers.
The ‘higher education sub-function’ significantly understates Commonwealth assistance for higher education. As the top line in grey in the chart below shows, using numbers from Budget Statement No. 4 on agency resourcing, it doesn’t even cover money flowing under HESA 2003 itself. The difference is money lent through the HELP loan scheme. Although the Budget papers don’t specifically quantify HELP lending this is likely to become the single largest source of funding for higher education, as international student revenues collapse and the Commonwealth Grant Scheme stagnates.
Read More »In the first post in this series on the conceptual and philosophical thinking behind student contributions, I argued that successive governments have primarily used them to limit system-level public expenditure.
Once the public spending constraint is achieved, this approach leaves room for other methods of setting student contributions. This post looks at giving universities a role in deciding what level of student contribution to charge.
Liberal plans for fee deregulation
The idea that universities should set their own fees on top of a government subsidy has a long Liberal lineage. Plans to lift controls on fees were in the 1991 Fightback! package, David Kemp’s 1999 leaked Cabinet submission, and in Christopher Pyne’s unsuccessful 2014 higher education reform proposal.
For fiscally-constrained governments, part of fee deregulation’s attraction is its scope to further reduce public expenditure. Universities can compensate for public spending cuts with increased student charges. But fee deregulation also has a more positive agenda.
Read More »This is the first of a series of posts looking at the conceptual and philosophical issues underlying debates about student contributions since the late 1980s.
The series is prompted by Dan Tehan’s proposed changes to student charges, but not limited to them.
This first post looks at the student contribution’s relationship to overall public funding, and whether it is intended to offset total government expenditure on higher education, or the cost of the student’s own course.
Course cost student contributions have been considered, but not implemented
The Whitlam experiment with free higher education ended in the late 1980s because the Hawke government wasn’t willing to pay the full cost of expanding enrolments. But then and since people have disagreed about whether students should contribute to their own costs or more broadly to the system’s costs.
Read More »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.
Read More »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 »
Update 15/4/20: This post contains material that has been revised and republished to take into account later information.
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The government now has a support plan for higher education. The key elements are letting universities keep student-related grants and loans in 2020 even if they enrol too few students, funding short courses, and regulatory fee relief.
In this era of government by tweet, media report, media release and media conference the details of how this might work are lacking as of today. I will revise this post as more detail comes to hand. For now, I will focus on the broad outline and pursue my pedantic interest in the legal basis of government policy.
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 (which could include full-fee students, which I will come to below). Whether this is due to COVID-19 or because it was just losing out in a tough NSW market is not clear. A number of other universities were struggling before COVID-19 due to demographic factors.
Whatever the reason, the minister now says that universities will 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 »
If things look bad for public universities in the COVID-19 era, they look much worse for many providers in the private higher education sector.* Not all are likely to survive a significant downturn in the international student market.
Although there are some commercially very successful players in private higher education, that is not the universal experience. When TEQSA reported on financial risk last year, it rated 12 per cent of for-profit providers as high risk, and 44 per cent as moderate risk. For not-for-profits, the corresponding risk ratings were 5 per cent and 40 per cent. This equates to more than 60 providers at high or moderate risk. As of April 2020, there are 134 non-university higher education providers.
The private higher education sector is diverse, with 37 providers having no international students in 2018 (based on not having a CRICOS registration). Generally speaking, however, the private higher education sector is more exposed to the international student market than public universities. About half of private sector students are internationals, compared to 31 per cent in the public universities. The true number is likely to be higher, as the statistics only include providers that have signed up for FEE-HELP, a domestic student loan program. Providers aimed exclusively at the international market have no need for FEE-HELP.Read More »
Andrew Norton 