Uni fee changes will erase egalitarianism

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ANU College of LawHigher education is an important policy area and while it has never possessed the electoral salience of school education, it can certainly arouse passion. This is apparent from the reaction to the Federal Government's proposed changes in higher education, where some of the consequences are fairly predictable, others less so.

An unregulated fee regime will result in an increase in course costs and, taken with a change in the formula for meeting HECS obligations, will mean substantially larger debts for students after their periods of study.

The prestigious Group of Eight institutions can be expected to exploit their reputational positions to charge top dollar, while those lower in the pecking order will face some challenges in determining the fee structure which reflects their market location. The ability of the top institutions to maximise revenue will only widen the gap between them and the rest, and even if this were not an intended outcome, it will surely not cause many sleepless nights for members of the Abbott Government.

The designers and defenders of HECS have long reminded critics that initial fears about debt-aversion on the part of potential students were never realised. With much bigger debt on the horizon, this feature of the system will be sorely tested. Economic logic suggests that at some point, potential students will be deterred by the prospect of what will seem like lifelong debt with its implications for family, relationships and home ownership.

How exactly does a 17-year-old decide whether selecting the degree from the prestige university over the same course at a newer institution justifies an extra decade of debt?

It seems unavoidable that many from the lower socio-economic ranks, unable to rely on any financial assistance from parents, will see no choice but to either opt out completely or plump for the cheapest option. It will take a very imaginative, targeted and generous scholarship scheme to work around that problem. One anomaly will be to open up places at prestige universities to affluent lesser-qualified applicants who previously would have missed out to a poorer but better qualified applicant now deterred by the higher fee levels.

It is difficult to predict whether these changes will affect higher education participation rates overall. But again, while this would be of concern to those who link an educated workforce with national growth and productivity, such a view is less than unanimous on the conservative side where some would contend that too many young people are attending university.

One possible unintended consequence may involve moderately well-off parents who wish to assist their children by saving to help fund their university studies. With HECS debts at a comparatively manageable level, such parents have been able to afford private school fees plus offer some level of support for tertiary costs, sometimes with upfront payments. For many parents, increased fees will mean doing both is no longer possible.

It may be that, faced with a choice, such parents will access the government school system and direct all their resources to supporting the costs of tertiary study, thus minimising the long-term debt borne by their children. This would be an interesting possible outcome, with potential benefits for the government school system.

Another area for speculation concerns the decision to allow non-university providers an enhanced role in the system, with domestic students able to access HECS for study at such institutions. Many of these are low-cost operators who might be able to offer some very attractive prices to students looking for the most economical deal, and some have a good record with small class sizes and individualised care programs.

But the quality of this sector varies and the risk that some students could find themselves receiving a less than satisfactory educational experience is not insignificant. In that context, the government's decision to cut funding to the national regulatory authority (the Tertiary Education Quality and Standards Agency) is disturbing.

One of the more obnoxious features of the debate has been the conservative crocodile tears for the poor low-paid worker subsidising the greedy student. Leaving to one side the offensive implication that such a worker's child could never aspire to tertiary education, the tears are nowhere to be seen for that same worker's subsidisation of private health insurance, private schools and negative gearing (none of which they will access), not to mention the abolition of the low income super contribution which such workers had enjoyed.

It would be naïve to pretend the current higher education regime is some sort of egalitarian nirvana. The ability of affluent parents to pay their children's HECS upfront means such students enter the workforce debt-free, unlike those from more modest backgrounds. The G8 universities have had no difficulty maintaining their privileged status, able to view the competition for leadership positions from the next level down with a wry grin.

But for all that, the existing system's strength has been that when the kid from the western suburbs of Sydney or Melbourne was offered a place at the city's sandstone university on academic merit, she could take up that place while incurring no greater debt than she would have done at a lesser-ranked institution.

Is it too cynical to suggest that for certain conservatives, confining the riff-raff to low status institutions is evidence of the virtues of the market? Australia egalitarianism has seldom so lacked friends in high places.


 

Paul RodanPaul Rodan is an adjunct professor in the Swinburne Institute for Social Research, Swinburne University of Technology, Melbourne. He is a board member of a private education provider.

Topic tags: Paul Rodan, Budget, Joe Hockey, universities

 

 

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Existing comments

Something has gone radically wrong with the Australian tertiary education system since I graduated from Melbourne in the 1970s. I fear for its future and that of this country if things continue the way they are doing. Only serious changes in the way the federal government and the university administrations think and act will arrest the decline.
Edward Fido | 03 June 2014


Banjo Paterson wrote: "You know the way that boys grow up, there's some that stick at home, but any lad that's worth his salt will roll his swag and roam". The lifetime debt the HECS proposals will load on a student will be another very valid reason for the best and brightest to indeed roll his, or her, swag, and roam, in search of an overseas career.. Could this be the start of another era of brain drain.
Vin Victory | 03 June 2014


This is a strong piece, thanks to Paul Rodan. I also work in the higher education sector and am greatly concerned about the impact these changes will have on students from lower socio-economic groups who can, currently, access the best institutions if they want to. It will only serve to deepen the divide between the elites/most privileged in our society, and everyone else. Deregulation will also cause research funding to dry up almost everywhere except in the Group of 8 and this is a terrible step backwards for a sector aiming for international research excellence. At the end of the day, the best researchers will also gravitate to the Group of 8 and the whole situation becomes a vicious cycle. This is not the virtues of the market -- this is an unfair playing field.
Susan | 03 June 2014


Paul, your doom and gloom sounds intuitively appropriate and obvious; but it does not actually reflect the empiric evidence internationally or in Australia. The university system has been overwhelmingly a middle-class domain, which only recently has been opened up to others. Deregulation is likely to accelerate working class participation, especially when linked to means-tested scholarships in much greater abundance.
Eugene | 03 June 2014


Firstly unworthy to suggest Abbot members may not have sleepless nights, though Paul Keating doesn't look sleepless for bringing in HECS. As for standards being lowered, this has been happening for quite some time, either students are doing courses for which they don't have the raw intelligence or the high school syllabus has under equipped them for higher education. In NSW most students have turned 18 in their final year. Currently Swinburne has 28 different categories of scholarship and within those, multiple scholarships. For the truly bright, opportunities are there, for the mediocre it is more difficult in every way. To refer to low socio economic people as riff-raff is insulting and divisive. In my day students drove taxis, my children worked in supermarkets. It gave them a good work ethic. Let the emphasis to be on raising standards, starting with kindergarten. Let the whole community foster a love of learning for learning’s sake, no matter what your abilities or background.
Jane | 03 June 2014


When I went to Sydney Uni in 1949, I had to pay all fees and I had to get certain marks because the Uni was full of ex-servicemen, so numbers were limited. Also, universities were limited, so the pressure was always on. I never knew what it was to have a holiday because I worked every holidays to earn money for my fees and accommodation. Young people, today, never had it so good. Can u really tell me why I should have to pay for some other child's education, today and why they can't make sacrifices themselves to pay their own fees? Perhaps a little time spent in struggling would make them appreciate what education is really about. It's not a right, it's a privilege to be embraced, fought for and appreciated and enacted.
shirley McHugh | 03 June 2014


I am wondering how all these scholarships we are hearing about will be funded. Or will they be another figment of someone's imagination?
Margaret McDonald | 03 June 2014


I have to disagree with Shirley. OK, it was different in 1949, but today there aren't many careers that don't require either a TAFE or university qualification - so both should be free because they're just what school was in 1949. Deprive someone of the chance to get that qualification and you're most likely condemning them to a life of casual low paid drudgery (cleaning? hospitality?). We can pay for today's young people to be educated, just as they will pay for the generation after them - do we want the world to get better? or worse? Another thing - not everyone who starts a university course finishes it. Imagine a young person, who for whatever reason that isn't their fault, has to drop out. They are unqualified, stuck with a large debt, can't even get unemployment benefit for months - honestly, who could think that was fair in today's rich Australia?
Russell | 03 June 2014


This is a major change and one that will create huge inequality. It is a budget decision without prior debate. We are now having the debate. There are few advantages to paying upfront since the previous government took away the 20 per cent discount and made it a 10per cent discount before abolishing the incentive altogether. The only advantage would be to not incur this new interest rate on the debt, which will be up to 6 per cent per annul. This will also apply to students who have completed a course but still have a debt. Jesus said that to those who have, more will be given and to those who have not, even what they have will be taken away. Somehow I don,t think he had the Abbott govt in mind.
Vince callaghan | 03 June 2014


Thank you for this. The government has to stop pitting one student against another and importing their crazy ideology into the workings of an already overburdened sector. We want a more egalitarian system because fair is fair. But the main reason for having a highly-educated population is that it is essential for the country's future prosperity - something this government seems to have missed entirely.
Sara Dowse | 04 June 2014


The Americanisation of our universities is not in the best interests of the students or our country. I dont think students want or expect a free ride (apart from Joe Hockey who complained about paying $250 fro his uni education) but something fair and equitable. If we can allow retirees with an income over $100,000 a year to not pay tax why not give the students a fair deal?
John | 04 June 2014


I need to clarify (for Jane) that I myself was not referring to lower socio-economic groups as "riff-raff": I was provocatively attributing such a view to elitist conservatives anxious to maintain their privileges. Re means-tested scholarships: my fear is that affluent parents able to minimise their taxable incomes will get their snouts into that trough, but I would love to be wrong. Finally, the "why should I pay for some child's education" argument: if the premise is that we should only pay tax for those things which benefit us personally, that would make for a very complex taxation system. More importantly, while education is both a public and a private good, these changes skew things too far the private way. Those with degrees will usually earn more and hence will pay more tax, which should mean a lesser tax burden on those below.
Paul Rodan | 05 June 2014


Thank you for your excellent article. There is one deeply inequitable aspect of these changes that you do not mention: the effect of compound interest on female graduates' debts. Even when women work full time, they typically earn less than their male counterparts with equivalent qualifications. Of course many take time out of the workforce to have children, and often return to work part time (either by choice or because they can't access affordable childcare). The application of compound interest to HECS debts will mean that a woman who has children will pay tens of thousands of dollars more in fees than a man who completes the same course. How is this fair? Does the Government wish to discourage female graduates from having children? Or does it expect that they will have their kids on the weekend, and be back at work first thing on Monday morning? As absurd as it sounds, that seems to be the underlying assumption here.
Lucie | 06 June 2014


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