Over the past few weeks, Education Minister Christopher Pyne has loudly hinted at major reforms to Australia's higher education system. Government funding is likely to be extended beyond the public universities, and current limits on student charges increased or abolished. Over time, this would lead to a more diverse and competitive system, but on average, a more expensive one too.
With the government looking for budget savings, higher education was never going to escape scrutiny. Spending on higher education had increased significantly in recent years, mainly due to the removal of most restrictions on bachelor degree student numbers in public universities.
With David Kemp, I was appointed by the government to review this "demand-driven system". We recommended extending the system to cover sub-bachelor qualifications, such as diplomas and associate degrees, and broadening it to encompass private universities and non-university higher education providers. These include specialist vocational or professional colleges, TAFEs offering degrees, and "pathway" colleges, which offer diploma courses that lead into bachelor degree programs at public universities. There are already about 130 non-university higher education providers.
Pyne has responded positively to this suggestion. Especially the TAFEs and pathway colleges meet the needs of a much wider group of people now seeking higher education. Compared to public universities, they offer intensive teaching methods and a more personalised environment.
Students who arrive at university via a pathway college do much better than would otherwise have been expected, given their prior school results. Some universities require students with weaker Year 12 results to attend a TAFE or pathway college before they are admitted. Although the academic outcomes are good, in private colleges students have to pay fees that are often $5000 to $10,000 more than they would pay at a public university.
Fourteen per cent of these undergraduate full-fee students are from low socioeconomic backgrounds, compared with 17 per cent of government-supported students in public universities. Most full-fee students borrow under the Higher Education Loan Program, a HECS-like program known as FEE-HELP. Under what the government now seems to be proposing, many of these students would pay much less than they do now. However, it is likely that students at public universities would pay more to finance extending the public funding system.
This reform and other financial savings mean higher student charges from the 2014 budget. The government now seems to have decided to go further. In a speech given at Monash University yesterday, Pyne talked about giving "universities and colleges greater control over their budgets". Rather than just getting private money to replace public money, universities and other higher education providers will be allowed to set higher fees and keep the money.
Possibly, the government's political calculation is that any increases in student charges will lead to Q&A-style protests. If they are going to spend their political capital, they might as well get major higher education reforms as well as a budget saving.
There are clear attractions in a more diverse and better-funded higher education system. One attraction, according to Pyne, is that it would allow more universities to compete with the world's best, which typically have much higher revenues per student than any of Australia's universities. Vice-chancellors of our leading research universities have publicly supported this idea. But of course there are also objections to such a change.
One concern is that students from disadvantaged backgrounds will be disproportionately affected. Despite the intuitive logic behind this concern, historical experience suggests that prospective students from low socioeconomic backgrounds are not generally put off by higher charges if income contingent loans are available. They make similar decisions to other prospective students about the costs and benefits of their realistic alternatives. Pyne has made it clear that FEE-HELP would be retained, although possibly modified.
Pyne's broader package of reforms directly targets a bigger problem for prospective students from disadvantaged backgrounds. Unfortunately, their school results are heavily skewed towards lower Australian Tertiary Admission Ranks (ATARs). Students directly entering a bachelor degree at a public university with an ATAR below 60 have only a 50 per cent chance of completing the degree within six years. Pathway colleges are important for improving their prospects and a necessary part of widening access to higher education.
Senate approval of these reforms is far from assured. Clive Palmer has indicated support for free education. Labor and the Greens are sceptical of higher student charges and private colleges. But these policy positions have contradictions Pyne will be able to exploit. Letting private colleges into the system would reduce fees for many students. Even if the broader fees agenda is postponed to another political time, there may be a Senate majority for opening up the system to all higher education providers.
Andrew Norton is the higher education program director at the Grattan Institute and was co-author, with David Kemp, of the Review of the Demand Driven System: Final Report.