Students should pay more for their degrees because they gain more from it than taxpayers, who foot an annual $6 billion bill in tuition subsidies, a new report says.
The Grattan Institute has issued an analysis of the public and private benefits of higher education, arguing students benefit more personally from a degree than the general public and should therefore bear more of the burden of the cost of higher education.
The think tank argues that any government reforms to tuition subsidies arising from the Lomax-Smith base funding review - currently under consideration - could save taxpayers $3 billion by shifting the costs to students.
The Lomax-Smith review recommends student fees should be redistributed to more adequately reflect the cost of their degree.
Tertiary Education Minister Chris Evans said yesterday the report was still under consideration, despite expectations the government would respond by last month.
He said ''the government will not be increasing fees for university students'' and ''the evidence is that dramatic increases in fees lead to decreased participation and higher debt''.
''We don't want a situation where students leave university, join the workforce and have debts that shadow them for many years, preventing them from marrying, getting a mortgage and developing their lives,'' Senator Evans said.
This year, Australian taxpayers will contribute $6 billion in tuition subsidies, but that is set to rise to $7 billion by the middle of this decade. Students contribute $17 billion in fees - largely offset by interest-free Higher Education Contribution Scheme loans. But what the public gets for its investment is not clear, according to the Grattan Institute's higher education program director Andrew Norton.
The report proposes a new model for setting higher education spending - arguing tuition subsidies should only be paid when they create public benefits that would not otherwise be created. It calls for public subsidies to be reduced by 40 per cent by 2017.
Disciplines such as healthcare and teaching would attract a greater share of taxpayer-funded support, while law and medicine students would see their fees rise.
''Graduates do well out of higher education. They have attractive jobs, above-average pay and status. They take interesting courses and enjoy student life,'' Mr Norton said.
''Given these large benefits, and with the HELP student loan scheme in place, most students would take their courses regardless of the size of the subsidy.
''Tuition subsidies therefore merely redistribute income to students and graduates. The general public - particularly those who do not go to university - are worse off.''
The report found the average female undergraduate contributed $240,000 more in tax over her lifetime than she would had she not completed a degree. The average male contributed $360,000 more.
Yet university graduates generally earned considerably more than year 12 graduates. Dentistry and medical graduates can expect to earn an average of more than $1.3 million over their lifetime than if they had finished school at year 12.
The report cautioned that any changes be introduced in an ''evolutionary way'' and ''monitoring of demand and skills shortages would allow subsidies to increase if there was a public benefit''.
The report is unlikely to find favour with students themselves, who have lobbied for greater levels of taxpayer support.